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EUR/USD in Double Bottom Attempt after Subdued CPI Data

Today's Eurozone CPI data showed inflation grew at a tepid pace. The flash estimate CPI y/y for May was reported to be 0.5%, missing the forecast and previous reading of 0.7%.


The decline in inflation should give the ECB more room to operate in terms of monetary stimulus. This SHOULD be EUR-bearish, but traders bought up the EUR/USD after the subdued inflation data.

(eurusd 1h chart 6/3)

A break above 1.3650 would be needed to complete the double bottom. This opens up some bullish correction scenario toward 1.3770. A break above 1.38 might be needed to revive the bullish outlook. Otherwise, the current rally is part of consolidation/correction against an almost month-long downswing from 1.3993 to 1.3585. 

If the double bottom is formed and there is a pullback, see if price can hold above 1.3625, and the 1H RSI hold above 40.  Those will be signs of a bullish development, and the 1.3770-1.38 will be in sight.

Otherwise, below 1.3625, the bearish outlook remains, and if price breaks below 1.3585, the next key support will be the 2014-low near 1.3476.