EUR/USD Falls on Hawkish Fed Signals, Middle East Tensions

The EUR/USD pair edged lower to around 1.1380 during the early Asian session on Monday, pressured by hawkish signals from the Federal Reserve (Fed) and escalating Middle East tensions.

Many Fed officials delivered hawkish remarks last week, with Cleveland Fed President Beth Hammack saying she is worried that persistently high inflation risks conditioning the American public to accept elevated prices as the norm. Philadelphia Fed President Anna Paulson said 'Some modest further tightening may be warranted.'

The markets are now pricing in nearly a 65.9% odds of the Fed October benchmark rate hike, up from 57.6% a week earlier and 9.4% a month earlier.