EURUSD Falls As EZ CPI Fuels Growth Fears

EZ Growth Concerns In FocusEUR has come under fresh selling pressure today as the latest eurozone inflation readings turned market attention back towards growth concerns there. Annually, core CPI was seen cooling slightly to 5.3% from 5.5% prior, in line with expectations. However, headline CPI was seen remaining unchanged at 5.3%, above expectations of a 5.1% reading.  The data serves as further evidence of the stickiness in inflation which is causing the ECB such difficulties. On the one hand, the ECB is concerned over the downside risks to the economy which are being exacerbated through further tightening. On the other hand, the bank has pledged to keep going with tightening until inflation is back at target.Hawkish ECB CommentaryRecent ECB commentary looks to be skewed towards supporting a further hike. German ECB chief Nagel said last week that he’s not yet convinced that inflation is under control. Latvian ECB chief Kazaks echoed these comments and opined that it is better to lean towards tighter policy given the inflationary backdrop. ECB’s Schnabel also signalled that further tightening might be necessary if inflation is not seen to be moving back to target in a timely manner.Downside EUR RisksThe eurozone numbers come on the back of stronger-than-expected German and Spanish CPI readings yesterday. In light of these data points, the odds appear to favour a further hike from the ECB in two week’s time. However, with growth concerns now taking hold, market impact could well see EUR moving lower consequently.Technical ViewsEURUSDFor now, the sell off in EURUSD has stalled into a test of support at the 1.0785 level. While this level holds, the focus remains on a further push higher and a fresh challenge of 1.1126 in line with the broader bull trend. However, should price break below current support, this will be firmly bearish, turning focus to the 1.0515 level next.