EUR gains as Italy inflation cools to 1.6%, supporting ECB dove view

EUR/USD has edged higher to 1.0855 following Italy's final May CPI revision showing inflation at 1.6% year-over-year, down from the preliminary 1.7% and April's 1.9%. The harmonized index (HICP) also came in lower at 1.7% versus the initial 1.9% estimate. These downward revisions reinforce the European Central Bank's dovish stance, with inflation continuing to ease across the eurozone's third-largest economy. The softer inflation data increases the likelihood of sustained ECB accommodation, though it paradoxically supports the euro by reducing concerns about aggressive policy divergence with the Fed. Markets are now pricing in a gradual ECB normalization path rather than rapid tightening. EUR/USD technical picture shows the pair holding above 1.0840 support, with resistance at 1.0880. Traders await Thursday's ECB meeting minutes and Friday's eurozone-wide inflation data for further policy direction clues.