Since the E chord is a dominant to Am (meaning you can't use
the E major scale since the chord "stems" from Am) you can use the harmonic A minor scale for example, because
it contains all the notes of the Am (or C) scale except the G is raised to a G#,
which is perfect for playing over E7 which has only one altered note (compared to Am or C), G#.
The E phrygian is the same as the C major and A minor scale, except it starts on E,
so you can use it as long as you avoid the G or make it sharp!
Happy jamming!
Edit: I wouldn't say you are modulating with an E7´since it's a chord
belonging to the Am and C keys.
Since it goes back to the familiar neighborhood of C/Am with the F and G
after the E7 I would say the E is a dominant to Am which in this case
probably qualifies as the paralell to the tonic C.