Euro recovers as Eurozone inflation stays firm

• EUR/USD trades around 1.1530 after recovering from an early intraday sell-off.
• Eurozone HICP inflation increased to 2.9% YoY in July, while Core HICP accelerated to 2.5%.
• Dallas Fed President Lorie Logan said she would have preferred a 25-basis-point rate hike, supporting the US Dollar.

EUR/USD trades near the 1.1530 area during Friday's American session, consolidating after a strong rally off intraday lows. The Euro found support from resilient Eurozone inflation data, although gains remain capped as hawkish Federal Reserve (Fed) rhetoric boosts the US Dollar.

Preliminary data from Eurostat showed that the Eurozone Harmonized Index of Consumer Prices (HICP) rose 2.9% YoY in July, up from June's 2.8% reading. Meanwhile, core HICP accelerated to 2.5% YoY, above both the previous 2.4% and economists' forecasts, suggesting underlying price pressure remains persistent. On a monthly basis, headline HICP increased 0.2%, while core HICP was unchanged.

Labor market figures were more mixed. Germany's unemployment rate edged higher to 6.4% in June from 6.3%, while the number of unemployed increased by 6,000, slightly above expectations, pointing to some moderation in labor market conditions.

The US Dollar, however, continues to draw support from renewed hawkish comments by Dallas Fed President Lorie Logan. Logan said monetary policy is not restraining the economy and argued that inflation is not on course to return to the Federal Reserve's 2% objective.

Short-term technical analysis:

On the 4-hour chart, EUR/USD trades at 1.1531. The pair holds a bullish near-term bias as it trades above both the 20-period and 100-period Simple Moving Averages (SMAs), with the short-term SMA rising and comfortably stacked over the longer one, suggesting an ongoing constructive trend. The Relative Strength Index (RSI) around 67 hovers in overbought territory, hinting that upside momentum remains firm, even if the risk of a brief pause or shallow pullback is growing.

On the downside, initial support is seen at 1.1526, backed by nearby horizontal levels at 1.1518 and 1.1513 that collectively form a tight demand band just under spot. A deeper retracement would expose 1.1485, ahead of the 20-period SMA near 1.1457 and the 100-period SMA around 1.1423, where the broader bullish structure would be expected to attract dip-buying interest as long as these moving averages hold.

(The technical analysis of this story was written with the help of an AI tool. Know more.)