EUR/USD holds below the 1.0600 mark ahead of the Eurozone CPI data

• EURUSD currently trades around 1.0575 amid the risk-on mood and the softer USD.
• EU and German ZEW Economic Sentiment Survey for October came in better than expected.
• US Retail Sales for September rose 0.7% MoM, stronger than the 0.3% estimated.
• Market players await the Eurozone inflation data, US housing data.

The EURUSD pair hovers around 1.0575 after retreating from the 1.0600 mark during the early Asian session on Wednesday. The risk-on flows dominate the market and weigh on the US Dollar (USD) lower. Meanwhile, the US Dollar Index (DXY) corrects lower to 106.20 and US Treasury yields surges sharply, with the 10-year Treasury yield reaching 4.83%.

On Tuesday, the EU's ZEW Economic Sentiment Survey came in at 2.3 in October from an 8.9 drop in the previous reading, beating the market expectations. German ZEW Survey Economic Sentiment also showed an improvement by climbing to -1.1 from -11.4 in the previous reading.

The European Central Bank (ECB) President Christine Lagarde said that the ECB is watching energy prices and the Israel-Hamas conflict for inflation risks. Meanwhile, ECB's chief economist Philip Lane stated that they will keep interest rates high until inflation returns to 2%, but this may take time longer than expected due to several factors.

The economic data released by the US Census Bureau revealed that the Retail Sales for September came in at 0.7% MoM, beating the market expectation of 0.3%. Retail Sales Control Group climbed 0.6% MoM versus 0.2% prior. The data suggest strong momentum in consumption. Additionally, US Industrial Production rose by 0.3% MoM, stronger than expected. Capacity Utilization improved to 79.7, better than estimated.

The Greenback edged higher on the back of the upbeat US data, but the impact was short-lived. However, higher US Treasury yields might cap the downside of the USD.

Minneapolis Federal Reserve Bank President Neel Kashkari on Tuesday said that inflation has taken considerably longer than expected and is still too high. Earlier, Chicago Fed President Austan Goolsbee and Philadelphia Fed President Patrick Harker maintained their dovish stance. Harker stated that the central bank should not create new pressures in the economy by increasing the cost of borrowing. Traders will take more cues from the Fed officials this week. The hawkish comments might lift the USD and act as a headwind for the EUR/USD pair.

Looking ahead, market players will monitor the final reading of the Eurozone Consumer Price Index (CPI) for September and Construction Output for August due later in the day. Also, ECB's President Lagarde's speech could offer some hints about the further monetary policy path. On the US docket, the US Housing Starts and Building Permits will be released on Wednesday. These events could give a clear direction to the EUR/USD pair.