EUR/USD Weakens as US Dollar Gains Strength Amid Hawkish Fed Stance

The EUR/USD pair is weakening to near 1.1575 in the early European session on Wednesday, as the US Dollar gains strength against the Euro amid hawkish Federal Reserve stance and escalating Middle East geopolitical tensions.

Traders are keeping an eye on the upcoming Eurozone Retail Sales and US employment data due on Friday, which may impact the pair's movement. The recent rise in tension in the Middle East is boosting safe-haven flows, supporting the Greenback and creating a headwind for the major pair.

Fed Chair Kevin Warsh's hawkish remarks at the Jackson Hole symposium might also contribute to the USD's upside. He warned that policymakers may need to tighten again if inflation fails to move convincingly towards 2%. Expectations of a September rate hike rose to 68%, up from below 40% before the speech, according to the CME FedWatch tool.

In terms of technical analysis, EUR/USD retains a neutral outlook in the near term. The pair is sitting just above the 100-day simple moving average (SMA), which lends immediate support, but it remains below the 20-day Bollinger middle band, leaving spot marginally capped within its recent range.