EUR/USD snaps winning streak near 1.0530 as US dollar rises

• USD/CHF trades lower near 1.0530 due to the upbeat US Dollar.

• The Palestine-Israel conflict could push the flow toward safe haven Greenback.

• Solid US NFP data bolsters the strength of the US Dollar (USD).

EUR/USD snapped the winning streak that began on Wednesday, trading in the red zone near 1.0530 during the Asian session on Monday. The pair is facing downward pressure due to risk aversion attributed to the Palestinian-Israeli military conflict.

In an interview with the French paper La Tribune de Manche, Christine Lagarde said, “The key ECB interest rates have reached a level that, if maintained for a long enough period, will contribute substantially to a timely return to target inflation.”

European Central Bank (ECB) President Christine Lagarde expects inflation to return to the 2% target. Lagarde also mentioned confidence in Europe’s gas reserves situation.

German industrial production (YoY) for August fell 2.0%, from a previous 1.7% decline. Although the monthly data showed a 0.2% decline, deeper than the 0.1% decline as expected.

Furthermore, the release of US nonfarm payrolls data on Friday weighed on the EUR/USD pair, initially weighing it down, but ultimately ending the previous session on a positive note.

The September jobs report showed a significant increase of 336,000 jobs, beating market expectations of 170,000. The revised figure for August was 227,000. Nevertheless, US average hourly earnings (MoM) were unchanged at 0.2% in September, falling short of an expected 0.3%. On an annual basis, the report indicated a decline of 4.2%, below the expected sequential figure of 4.3%.

The ongoing military conflict in the Middle East, involving Hamas and Israel, is closely watching the markets. Concerns remain that the conflict could escalate and spread across the region, triggering geopolitical uncertainty that could reverberate across global markets.

The US dollar index (DXY) rebounded after three straight days of losses, driven by upbeat US Treasury yields. DXY trades around 106.30 at the time of writing.

US Treasury yields rose again, driven by expectations that the Federal Reserve (Fed) will keep interest rates high for an extended period. The yield on the 10-year US Treasury bond hit 4.80% again, 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 to stabilize international exchange rates and promote growth.

Additionally, close attention may be paid to the US Core Producer Price Index towards the end of the week, as it plays an important role in assessing inflation trends and economic conditions within the US.