• EUR/USD continues the winning streak amid the geopolitical tension in the Middle East.
• The conflict could increase flows into the traditional safe-haven assets.
• Blockbuster US Nonfarm Payrolls supported the US Dollar (USD).

EUR/USD kicks off the week by continuing the winning streak that began on Wednesday, trading higher around 1.0570 during the early Asian session on Monday.

The markets are closely monitoring the rekindled military conflict in the Middle East involving Palestine and Israel. The concern is that this conflict has the potential to escalate and spread to other parts of the region, introducing geopolitical uncertainties that could impact global markets.

The escalation of violence in the Middle East can potentially drive increased flows into traditional safe-haven assets such as US Treasuries, Gold, and the Swiss franc (CHF). Investors often seek refuge in these assets during times of geopolitical uncertainty.

Moreover, the conflict could trigger a fresh rally in oil prices, introducing new inflationary pressures. Central banks and major economies might find themselves grappling with the challenge of managing these emerging inflationary trends.

The renewed geopolitical tensions could impact the recent surge of the EUR/USD pair. Such events often lead to shifts in risk sentiment, influencing currency markets as investors reassess their positions in response to the heightened uncertainty.

The US Dollar Index (DXY) rebounds post three-day losses, trading around 106.20 at the time of writing. The US Dollar (USD) experienced strength due to the blockbuster US Nonfarm Payrolls data released on Friday.

US Treasury yields rebounded on the likelihood of the Federal Reserve (Fed) to keep interest rates higher for a prolonged period. The 10-year US Treasury bond yield reached again the highest levels, standing at 4.80% by the press time.

The jobs report showed an increase of 336K in September, surpassing the market expectation of 170K. The August’s reading was a revised 227K. However, US Average Hourly Earnings (MoM) remained consistent at 0.2% in September and fell short of the 0.3% expected. At the same time, the yearly report showed a decline to 4.2%, which was expected to be consistent at 4.3%.