EUR/USD rises amid escalating Middle East conflict and falling US yields

• The EUR/USD pair rises for the third day in a row and trades above 1.0600 after a daily low of 1.0571.
• US stock markets recover some losses, while the drop in US bond yields to 4.84% weakens the Dollar.
• Upcoming economic data includes US Q3 GDP, core PCE and the ECB’s monetary policy decision.

EUR/USD rises for the third day in a row, even as the Middle East conflict continues to worsen, as US troops came under attack in Syria, while Israel halts its ground offensive amid diplomatic efforts . The pair trades above 1.0600 after hitting a daily low at 1.0571, gaining 0.52%.

The EUR/USD pair gains 0.52% and trades above 1.0600, with risk appetite.

Market sentiment shifted to bullish during Monday’s session amid the escalating conflict between Israel and Hamas. US stock markets reversed some of last week’s losses, while US bond yields undercut the dollar. The 10-year US Treasury Bond yield is at 4.84%, down seven basis points, while the US Dollar Index (DXY) falls 0.47% to 105.66.

The US economic agenda is light, as Federal Reserve (Fed) officials entered their blackout period. Most policymakers were neutral to markets, and market players expect the Fed to keep rates unchanged in its Nov. 1 policy decision. On the other hand, the Chicago Fed’s national activity index for September stood at 0.02%, up from -0.22% in August. Preliminary third-quarter Gross Domestic Product (GDP) data will be released next, as well as the Fed’s preferred inflation indicator, the core PCE.

In the Eurozone (EU), the agenda will include preliminary PMI indices and the European Central Bank’s (ECB) monetary policy decision, with growing speculation that the Fed will keep rates unchanged. After this, ECB President Christine Lagarde’s press conference would be the highlight after the banking meeting.

EUR/USD Price Analysis: Technical Outlook

With EUR/USD reaching a new cycle high around 1.0649, buyers are likely to test the 1.07 area in the near term, although they would face solid resistance at the 50-day moving average (DMA) in 1.0683. A break of the latter would expose the former, with the next resistance emerging at the September 20 high at 1.0736. Conversely, if the pair falls below the October 12 high at 1.0639, the door would open to challenge 1.0600. If sellers enter the picture, they could push the pair towards the latest swing low of 1.0495.