EUR/USD snaps the winning streak near 1.0530 on rising US Dollar

EUR/USD snaps the winning streak that began on Wednesday, trading in the red zone near 1.0530 during the Asian session on Monday. The pair is experiencing downward pressure due to risk aversion, which is attributed to the Palestine-Israel military conflict.

In an interview with the French paper La Tribune Dimanche, Christine Lagarde stated, "The key ECB interest rates have reached levels that, if maintained for a sufficiently long duration, will make a substantial contribution to the timely return of inflation to the target."

European Central Bank (ECB) President Christine Lagarde expects to meet the target of inflation back down to 2%. Lagarde also mentioned the confidence in Europe's gas reserves situation.

Germany’s Industrial Production (YoY) for Aug, declined by 2.0% from the previous 1.7% fall. While monthly data showed a fall of 0.2%, deeper than the 0.1% decline as expected.

Furthermore, the release of US Nonfarm Payrolls data on Friday had an impact on the EUR/USD pair, initially putting pressure on it, but ultimately concluding the previous session on a positive note.

The September jobs report showed a significant rise of 336,000 jobs, exceeding the market's anticipation of 170,000. The revised figure for August was 227,000. Nevertheless, the US Average Hourly Earnings (MoM) remained unchanged at 0.2% in September, falling short of the expected 0.3%. On an annual basis, the report indicated a decrease of 4.2%, below the expected consistent figure of 4.3%.

The ongoing military conflict in the Middle East, involving Hamas and Israel, is closely monitored by the markets. Concerns persist that the conflict may escalate and spread throughout the region, introducing geopolitical uncertainties that could reverberate across global markets.

The US Dollar Index (DXY) has rebounded after three consecutive days of losses, propelled by optimistic US Treasury yields. The DXY trades around 106.30 at the time of writing.

US Treasury yields have rebounded, influenced by expectations that the Federal Reserve (Fed) will maintain higher interest rates for an extended period. The 10-year US Treasury bond yield has once again reached 4.80%, near its peak since 2007.

Investors are expected to keep a close eye on the upcoming International Monetary Fund (IMF) meeting, where discussions will revolve around strategies for stabilizing international exchange rates and promoting development.

Furthermore, there could be a keen focus on the US Core Producer Price Index later in the week, as it holds a pivotal role in assessing inflationary trends and economic conditions within the United States.