EUR/USD edges lower as Italian CPI confirms 1.2% inflation expectations

EUR/USD has slipped 0.1% to 1.0825 following Italy's December CPI data, which came in line with preliminary estimates at 1.2% year-over-year. The confirmation of Italian inflation data, combined with stable core inflation at 1.7%, suggests moderate price pressures in the eurozone's third-largest economy. Italy's 2025 inflation forecast of 1.5% represents an increase from 2024's 1.0%, potentially supporting the European Central Bank's gradual policy normalization. However, the relatively modest inflation figures compared to the ECB's 2% target may limit euro upside potential. Technical indicators show EUR/USD testing support at 1.0820, with resistance at 1.0850. Traders are awaiting broader eurozone inflation data and ECB policy signals for clearer directional cues. The pair's near-term trajectory will likely depend on upcoming US economic releases and any divergence in Fed-ECB policy expectations.