(Updates at market close)By Khushi MalhotraIndian government bonds traded in a tight range on Tuesday, following a recent rally, as traders awaited the fine print of a tentative U.S.-Iran peace deal, offsetting optimism over a drop in crude oil prices to near $80 a barrel.Euro zone bond yields steady near two-week low after Middle East peace dealEuro zone bond yields stabilized after a recent dip. A US-Iran deal to reopen the Strait of Hormuz is easing energy supply concerns. This development is reducing inflation worries and slowing growth fears. Expectations for further interest rate hikes by major central banks, including the European Central Bank, have been trimmed. Investors are now anticipating fewer rate increases this year.The yield on the benchmark 6.94% 2036 note ended at ‌6.8651% versus ⁠6.8704% ⁠on Monday. Yields move inversely to bond prices."A lot of the rally happened in ​the last few sessions, so bonds are consolidating," a fixed-income trader at an asset manager ​said.While U.S. President Donald Trump declared the U.S.-Iran interim deal to end the war in the Middle East was "done" and entering a second stage, ​the lack of public details and the absence of ⁠a permanent ‌truce kept traders wary.The benchmark Brent Crude contract was last at $80.99 a barrel in Asian trade, hovering at its ⁠lowest levels seen over three months ago."The U.S.-Iran deal and the imminent reopening of the Strait of Hormuz has led to Brent plummeting below $85 barrel. However, there is a material risk of continued physical market imbalances causing prices to move toward and beyond $90/bbl in coming weeks," Emkay Global Financial Services said in a note.India is the world's third largest oil importer and consumer, making it highly ‌vulnerable to oil swings. Earlier this month, the RBI raised its inflation forecast for the fiscal year to 5.1% from 4.6%, though it kept interest rates ⁠on hold to monitor the second-round effects of supply-driven price pressures.Liquidity also remained muted due to advance tax outflows this week, with the average bank liquidity ​surplus slipping below 1% of deposits for a third fortnight.RATESIndia's overnight index swap rates fell, tracking the oil slump.The one-year swap rate fell 3.25 bps to 5.8925% and the two-year rate was down 2 bps at 6.05%. The five-year rate eased slightly to 6.3125%.