• Eurozone consumer prices rose by 5.3% in July, down from 5.5% in June.

• Services inflation in the Eurozone slightly increased to 5.6% from 5.4%.

• The Eurozone economy is projected to maintain growth in the upcoming years.

Today’s EUR/USD outlook is slightly bullish. Although the euro edged higher on Monday, it stayed close to Friday’s lows. As per Friday’s Eurostat data, Eurozone inflation continued to decelerate, with even the underlying pressures on prices appearing to have peaked. Consequently, the European Central Bank’s (ECB) burden to persistently raise rates has eased.

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In just one year, the ECB has raised rates from deeply negative levels to the highest in two decades. It aimed to counter a remarkable surge in inflation. Policymakers are deliberating whether their actions have adequately steered price growth back to the targeted 2%.

Consumer prices rose by 5.3% in July, down from 5.5% in June, extending a trend that commenced last autumn. Meanwhile, the measure that excludes food and energy remained steady at 5.5%.

However, services inflation slightly increased to 5.6% from 5.4%, raising concerns due to the influence of wages on services costs, which tend to persist. 

Despite these relatively moderate figures, they might not definitively resolve the ECB’s quandary on rates. Market expectations still anticipate another rate hike to 4% later this year. However, it may not necessarily occur in September.

According to European Central Bank’s chief economist Philip Lane, the Eurozone economy is projected to maintain growth in the upcoming years. There is a low likelihood of encountering a severe or prolonged recession. 

EUR/USD key events today

Investors don’t expect any important data releases from the Eurozone or the US. Therefore, the pair will likely stay close to Friday’s lows.

EUR/USD technical outlook: Bulls teetering on 30-SMA break.

On the charts, EUR/USD is on the brink of breaking above the 30-SMA and changing the bias to bullish. Similarly, the RSI is nearly crossing above 50. After making several lower lows, the bearish trend paused at the 1.0850 support level. Bears had shown some weakness as the price did not make big swings from the 30-SMA. 

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At the moment, bulls have crossed the 30-SMA. However, they must close above to confirm a sentiment shift. This would allow the price to retest the next resistance level at 1.0950.

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