Is password authentication supported?

No, it is not because password based SSH authentication is less secure than public key based authentication.

With password based authentication, your machine must send the password to the SSH server. This means that if an attacker compromised the login node, they could capture the passwords of anyone attempting to login; which would be VERY BAD!.

With public key based authentication, the HPC login nodes only ever get you public key while the private key stays secret on your machine and is never transfered. This means that if an attacker compromised the login node, they would get NEITHER your password nor your SSH private key. Such an attack is still bad of course, but at least the attacker can’t log into people’s GWDG email accounts, wipe their OwnCloud shares, etc.