EUR/USD gains momentum approaches 1.0560s on sentiment improvement, soft USD

• EUR/USD trades around 1.0550s, marking a 0.44% increase.
• Germany's Wholesale Prices remain unchanged MoM; annual figures show a decline.
• ECB President Christine Lagarde emphasizes close monitoring of energy prices and Middle East developments.

EUR/USD advanced solidly late in the New York session, as the Euro (EUR) found acceptance at around 1.0550s, with the pair at the brisk of cracking last Friday’s daily high of 1.0558, which could open the door to challenge the 1.0600 figure. As of writing, the major exchanges hands at around 1.0550s, up 0.44%.

EUR/USD on the verge of testing 1.0600 on dovish Fed remarks, EU’s data

Improvement in risk appetite underpins the EUR/USD despite the ongoing conflict between Israel and Hamas, which remains contained despite escalating within the Gaza Strip. The Eurozone (EU) economic docket featured Wholesale Prices in Germany, which rose 0.2% MoM in September, unchanged from previous readings, while on an annual basis, plunged -4.1% from -2.7%.

Meanwhile, Christine Lagarde, the President of the European Central Bank (ECB), informed eurozone finance ministers that the ECB is closely monitoring energy prices and the developments arising from the Israel-Hamas conflict to assess their potential impact on inflation.

In the United States, Chicago Fed President Austan Goolsbee and Philadelphia Fed President Patrick Harker maintained dovish positions during a busy week for Federal Reserve (Fed) policymakers. Harker noted that the current interest rate levels discouraged potential homebuyers, suggesting that the Fed might have completed its rate-hiking cycle.

Regarding economic data, October's New York Empire State Manufacturing Index declined compared to September's figures. However, it exceeded expectations. The decrease was attributed to a dip in new orders, and fewer companies reported higher prices received. This latter point is a sign of potential deflationary pressures in the economy.

EUR/USD Price Analysis: Technical outlook

From a daily chart perspective, the EUR/USD remains downward biased unless buyers reclaim the 1.0600 figure and break the latest cycle high of 1.0639. A breach of those levels, the pair could test the 1.0700 figure before challenging the 50-day moving average (DMA) At 1.0720. On the flip side, the major first support would be last week’s low of 1.0495, followed by the October 3 swing low of 1.0448.