EURUSD Testing Support Following Fresh CPI Fall

Eurozone Inflation Falls AgainThe Euro has come under fresh selling pressure today on the back of yesterday’s data. Headline eurozone CPI was seen dropping to 2.9% last month, down from 4.3% prior and below the 3.1% the market was looking for.  Core CPI was a little stickier at 4.2%, but still down on the prior month’s 4.5%. In all, the data shows that inflation continues to head back towards target and as such, ECB expectations remain geared towards keeping rates on hold near-term. In light of the growing downside economic risks facing the eurozone economy, traders’ minds are turning now more towards anticipating the first ECB rate cuts next year. Market pricing currently pegs the first cuts to arrive in H1 2024 despite ECB push back.Fed On WatchAgainst a backdrop of better-than-forecast US data yesterday, EURUSD now looks vulnerable to a fresh turn lower. The Fed will of course be the main focus today and, in light of continued data strength, traders expect the Fed to retain a hawkish tone signalling the potential for further tightening if needed. Such a message should keep EURUSD pressured through the back of the week.Technical ViewsEURUSDThe pair is now once again testing support at the 1.0515 level. This is a major pivot for the market and a break below here will turn focus on to a much deeper move down towards 1.0093 longer run, in line with falling momentum studies readings. Bulls need to see price back above the 1.0785 level to negate this view.