EUR/USD Struggles Amid Geopolitical Tensions and Hawkish Fed

The EUR/USD pair is struggling to regain momentum as it edges lower at the start of the new week, weighed down by rising geopolitical tensions and a hawkish stance from the US Federal Reserve.

French President Emmanuel Macron warned on Friday that Russia's hybrid threat facing Europe and France has intensified, further undermining the Euro. The latest developments in the Middle East, including an attack by Iranian-backed Houthis in Yemen on Saudi Arabia, are also keeping the geopolitical risk premium in play.

The US central bank raised borrowing costs for the first time in over three years last week, with officials expecting one more rate hike this year. In contrast, the European Central Bank warned that price pressures could last longer than anticipated, lifting bets on further policy tightening in October and supporting the EUR/USD pair.

However, ECB President Christine Lagarde's speech later this Monday will likely provide some impetus to the shared currency, but the focus remains on the incoming geopolitical headlines. The crucial meeting between US President Donald Trump and his Chinese counterpart Xi Jinping on Thursday will also influence risk sentiment and drive the USD, determining the EUR/USD pair's near-term trajectory.