EURUSD Sees Heavy Two-Way Risk Ahead of EZ CP

CPI on WatchToday is likely to be a pivotal session for EURUSD with the release of the July flash CPI estimate for the eurozone due shortly. On the back of the latest ECB meeting last week, ECB rate-hike bets have cooled somewhat. While the bank pressed ahead with further tightening as expected, the guidance around future rate moves was more ambiguous. The ECB conceded that the economy was showing signs of weakness and that any further adjustments would be data dependent. Additionally, the ECB said that at the September meeting, a pause would be considered just as thoroughly as a further hike.  Two-Way Risk TodayWith market expectations now more divided, there is very clear two-way risk around today’s number. Should inflation be seen to have fallen against this month, particularly if forecasts are undershot, EUR is likely to cool as traders pare back their tightening expectations. On the other hand, should we see any stickiness in today’s data, particularly if inflation is seen rising above forecasts, this should lead to a fresh wave of EUR buying on the view that the ECB will likely hike again in September.Technical ViewsEURUSDThe correction in EURUSD has seen the pair falling sharply back under the 1.1126 level. Price is now close to testing the rising trend line from last year’s lows, just ahead of structural support at the 1.0785 level. This is a key area for bulls to defend. If broken, the focus will shift to 1.0515 as deeper support.