Italy’s July Consumer Price Index (CPI), based on the Harmonised Index of Consumer Prices (HICP), increased by 1.7%. This was more than the expected rise of 1.6%. The year-over-year CPI is now at 1.7%, surpassing the forecast of 1.5%. The previous report also indicated a year-over-year CPI of 1.7%.

Eurozone Unemployment Influence

The lower unemployment rate in the Eurozone supports the European Central Bank’s (ECB) decision to keep its current position. This suggests that the ECB may have finished its cycle of easing. An interest rate hike could happen in the future, possibly as early as 2026. The latest data helps us understand the economic conditions that impact monetary policy decisions. With Italy’s persistent inflation and falling Eurozone unemployment, the ECB’s rate-cutting period seems to be over. We expect the ECB to keep rates steady for a long time, with any potential increase not likely until 2026. This situation creates a unique environment for trading derivatives in the upcoming weeks. For interest rate traders, this means the front end of the yield curve will stay stable. December 2025 Euribor futures are expected to see minimal activity, reflecting market acceptance of a steady ECB policy. The real action will happen in longer-dated contracts, as we’ve already noticed June 2026 futures beginning to price in a slight chance of a rate hike.

Impact on the Equity Markets

This predictability in policy should reduce short-term volatility in the equity markets. The VSTOXX index, which measures Euro Stoxx 50 volatility, has dropped to about 13.5, a notable decrease from earlier this year when rates were cut. Selling weekly or monthly options on major European indices to collect premiums appears to be a smart strategy in this setting. Looking back, the rapid rate hikes of 2023 have shifted into the cautious easing seen in early 2025, which seems to have paused. We recall ECB President Lagarde’s recent remarks from the Sintra forum, emphasizing that policy will depend on data. The latest Eurostat flash estimate shows the Eurozone HICP at 2.1%, providing the bank with no reason to act immediately. This situation keeps the Euro within a narrow range against the US dollar. The end of the easing cycle offers solid support for the currency, but the distant possibility of a rate hike prevents any major rise. We expect EUR/USD to fluctuate between 1.08 and 1.11, making this an optimal market for selling option strangles. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now