EUR/USD Rally Expected as ECB Meeting Looms with Hawkish Outlook

EUR/USD is positioned for potential gains ahead of the European Central Bank's July policy meeting, with markets anticipating hawkish signals amid persistent inflation concerns. The pair currently trades near 1.0920, showing resilience above the 1.0900 support level. Eurozone inflation remains elevated at 5.5%, well above the ECB's 2% target, fueling expectations for continued monetary tightening. Markets are pricing in a 70% probability of another 25 basis point rate hike, which would bring the deposit rate to 4.00%. Technical indicators suggest bullish momentum, with the RSI at 58 and the pair trading above both 50-day and 200-day moving averages. Immediate resistance lies at 1.0970, with a break potentially opening the path to 1.1000. The dollar's recent weakness, driven by cooling US inflation data, provides additional support for EUR/USD upside. Traders should monitor ECB President Lagarde's press conference for forward guidance on the rate trajectory.