EUR/USD Rallies on Eurozone Disinflation Concerns Testing ECB Resolve

EUR/USD has surged 0.7% (75 pips) to 1.0625, paradoxically strengthening despite growing concerns about Eurozone disinflation. November's preliminary CPI data showed inflation falling to 2.2% YoY from 2.4%, below the ECB's comfort zone and raising questions about the pace of future rate cuts. The euro's strength primarily reflects broad dollar weakness rather than inherent euro positivity. Markets are now pricing in a 40% chance of a 50-basis-point ECB cut in December, up from 25% last week. The technical picture shows EUR/USD breaking above the 1.0600 resistance, with momentum indicators suggesting further upside toward 1.0680. However, the disinflation narrative poses medium-term risks for the euro, as aggressive ECB easing could cap gains. Traders should monitor Thursday's ECB officials' speeches for clarity on the policy outlook, as any dovish signals could reverse current euro strength despite the favorable technical setup.