EUR/USD Flat Ahead of Fed Decision Amid Iran Tensions

The EUR/USD pair is trading flat as investors remain cautious ahead of the Federal Reserve's (Fed) interest-rate decision on Wednesday. Markets are pricing in a 30% chance of a 25-basis-point rate hike, with most expecting the Fed to keep rates unchanged at 3.50%-3.75%. The US Dollar stays well-supported by prospects of higher US interest rates and lingering geopolitical risks.

Oil prices have kept inflation risks tilted to the upside, with traders closely monitoring developments in Iran, where President Donald Trump has warned that it's a 'good time for Iran to make a deal.' The Oman government has proposed joint management of the Strait of Hormuz through 'voluntary fees' to prevent Tehran from exercising sole control over the waterway.

Markets are awaiting US and Eurozone GDP and inflation data later this week, with preliminary second-quarter Gross Domestic Product (GDP) data from both regions due on Thursday. The European Central Bank's hawkish stance is also being closely watched, as policymakers guide for a hike in September.