Reduction occurs when a chemical specie gains electrons or its valence number is reduced. In the case of this reaction, The valency of copper before this reaction is +2, the valency of oxygen is -2 and valency of hydrogen is 0.
After the reaction, the valency of copper is 0, the valency of hydrogen is +1 and the valency of oxygen remains -2.
Therefore, Cu is reduced in this reaction.
