How to fix Apple Watch 'ghost touches' - and which smartwatch versions are affected - Wareable
Briefly

Apple is investigating 'ghost touches' across several smartwatch models, including the Series 7, Series 8, and the Apple Watch Ultra, following earlier issues on Series 9 and Ultra 2. Users are advised not to replace affected units but to update and reset the devices instead.
Users experiencing phantom touches on Apple Watches, especially on the passcode screen, can try updating their devices as a potential solution. The Apple Watch subreddit has numerous reports of this issue.
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