EUR/USD Bounces Off One-Week Low Amid Ongoing USD Strength

The EUR/USD pair has bounced off its one-week low of 1.1500 against the US Dollar, but it's still holding above this key psychological mark due to ongoing concerns about oil-driven Fed hike bets and geopolitical risks.

Investors are pricing in a high chance that the Federal Reserve will raise borrowing costs by the end of this year, amid fears that higher energy prices could rekindle inflation. This has lifted the US Dollar to a two-week high, exerting pressure on the EUR/USD pair.

The European Central Bank is expected to raise interest rates by 25 basis points at its September policy meeting, with money markets pricing in roughly a 90% probability of this happening. While this hawkish outlook limits losses for the shared currency, it's still not enough to overcome bearish sentiment driven by USD strength.

The focus now shifts to US macro data, including the Producer Price Index (PPI) and Weekly Initial Jobless Claims, which will drive the USD's direction in the coming days.