President Donald Trump announced last week the USA would pull out of the 2015 accord, which is created to keep Tehran's nuclear ambitions in check and took over a decade to negotiate.
Repudiating the result of more than a decade of diplomacy, Trump complained that the deal does not cover Iran's ballistic missiles, its role in regional wars or what happens after the pact begins to expire in 2025.
In one of a series of meetings, foreign ministers from Britain, France and Germany - signatories of the 2015 deal to stop Iran developing nuclear weapons - were to hold talks with Iranian Foreign Minister Mohammad Javad Zarif, amid concerns that the sanctions will also damage European business interests.
Merkel reasserted a defence of the deal in remarks to lawmakers in the Bundestag lower house of parliament.
She added: "Britain, France and Germany were of the opinion that the agreement against Iran's nuclear armament is an agreement that certainly has weaknesses, but an agreement we should stand by".
The deal between Iran and six world powers lifted most worldwide sanctions in 2016 in return for Tehran curbing its nuclear programme, under strict surveillance by the United Nations nuclear watchdog.
Merkel used her annual budget speech to Parliament to affirm Berlin's position on the issue, listing the US pullout among several pieces of "troubling news" - along with recent chemical attacks in Syria, violence in Gaza and daily cease-fire breaches in Ukraine.
"Trump played his first card, but miscalculated the second move", Rouhani was quoted as saying by the ISNA agency.