EUR/USD slipped on Thursday, erasing some of the previous session's gains and appeared vulnerable to more losses due to investors' central bank expectations, inflation and technicals, even after Fed Chair Powell's dovish tone on Wednesday.

Weekly U.S. jobless claims and the job components in Philly  Fed manufacturing data indicate a solid recovery in the U.S. jobs market, which should make it more difficult for the Fed to keep policy unchanged.

U.S. inflation running much hotter than expected is in sharp contrast to euro zone inflation. June euro zone HICP is expected to drop from May's data. A below estimate HICP result would reinforce President Christine Lagarde's comments that the ECB should not tighten too soon.

Rates markets highlight investors expectations of policy divergence. Comparisons of December 2023 Eurodollar futures EDZ3 to those of December 2023 Euribor futures FEIZ3 suggest investors expect the Fed to hike rates more aggressively than the ECB.

Technicals suggest EUR/USD should head lower. EUR/USD recently broke the base of a long-term bull channel and is holding below it. Falling daily and monthly RSIs imply downside momentum remains and EUR/USD remains below the 10- and 21-day moving averages.

Tests of the March and November monthly lows still seem likely.

(Christopher Romano is a Reuters market analyst. The views expressed are his own) ((christopher.romano@thomsonreuters.com;))