Hopes for a diplomatic resolution increased with Rouhani's win over conservative rivals in June, when voters replaced hardliner Mahmoud Ahmadinejad with a cleric whose watchword is "moderation" but who is still very much an Islamic Republic insider.
"The only way for interaction with Iran is dialogue on an equal footing, confidence-building and mutual respect as well as reducing antagonism and aggression," Rouhani told parliament after taking his oath of office. "If you want the right response, don't speak with Iran in the language of sanctions, speak in the language of respect," he said.
Within hours, the United States said it was ready to work with Rouhani's government if it were serious about engagement. "The inauguration of President Rouhani presents an opportunity for Iran to act quickly to resolve the international community's deep concerns over Iran's nuclear programme," White House spokesman Jay Carney said in a statement. "Should this new government choose to engage substantively and seriously to meet its international obligations and find a peaceful solution to this issue, it will find a willing partner in the United States," he said in the statement.
Signalling both his wish to get straight down to work and a likely willingness to engage with the United States, Rouhani immediately presented a list of Cabinet nominees to the parliament speaker that included Iran's former ambassador to the United Nations, Mohammad Javad Zarif, as foreign minister.
Parliament must approve the proposed ministers before they can take office and the speaker said the assembly would review the nominees in the next week.
Zarif is a respected diplomat involved in negotiations with the US since the 1980s and well known to top US officials including Vice President Joe Biden and Defence Secretary Chuck Hagel.