Outlook for the Euro rests on critical day of trading from a technical perspective + Eurozone inflation rate rises to 1.4 pct in May

The euro dollar exchange rate is now unchanged on last night's close; EUR-USD is at 1.3077.
The euro pound exchange rate is 0.21 pct higher at 0.8552.
The euro Australian dollar rate is 1.16 pct higher at 1.3545.

(Please Note: The above are wholesale market quotes; your bank will affix its own spread to the above when passing on their retail rates. However, an independent FX provider will guarantee to beat your bank's offer, thus delivering you more currency. Please learn more here.)

Eurozone inflation in strong increase

The key fundamental driver of the euro at present is the just-released Eurozone inflation number.

Eurozone inflation rate rose to 1.4 pct in May from 1.2 pct in April.

"Increased Eurozone inflation: A new sign that 17-nation currency area is starting to quit recession," says economist Rafael Llerena.

From a purely currency orientated perspective the prospect of increasing inflation will likely see the ECB think twice about cutting interest rates any further - a positive development for EUR.

Technical forecasters await 'crucial day of trading' for the euro dollar pair

Turning to the all-important technical charts for insights into where the euro is headed we note yesterday's strong performance has brought an increasingly bullish picture to the fore for this pair today.

Joshua Mahony at Alpari UK says where EUR/USD trades today could clarify the outlook:

"The dollar weakness seen yesterday allowed this pair to rise, yet a clear respect for the 100 day moving average kept the price action in check. Subsequently, today we are looking at a crucial day of trading whereby our outlook for the pair can be further clarified with either a move higher, thus confirming a breakout from the descending triangle, or a move back into this formation to increase expectations of a return to the lows of 1.278.

"Taking the stochastic and CCI indicators into account, my bias is for a push lower into the triangle and a continuation of the devaluation in the euro. This is also consistent with the standpoint that the Fed is seeking to taper their stimulus package, whilst the ECB are expected to become increasingly loose with their monetary policy, thus pushing the euro lower.