EUR/USD Steadies Near 1.1590 Amid Hawkish Fed Rhetoric and Middle East Tensions

The EUR/USD pair has stabilized near 1.1590 in the early Asian session on Thursday, but its upside potential is limited by hawkish Federal Reserve expectations and escalating tensions in the Middle East.

Fed Chair Kevin Warsh's warning that policymakers may need to tighten interest rates again if inflation fails to move towards 2% has boosted expectations of a September rate hike, with the CME FedWatch tool showing a 62.3% chance, up from below 40% before the speech.

Rising oil prices have also sparked concerns about the euro area's terms of trade, leading strategists at Scotiabank to suggest that the shift in commodity dynamics is undermining support for EUR.