In December, Germany’s Harmonised Index of Consumer Prices (HICP) rose by 2% compared to last year, matching expectations. This demonstrates stable consumer price inflation for the period. Other financial updates involve shifts in currency pairs like USD/CNH and EUR/USD. The USD/CNH has weakened, while EUR/USD has stayed at one-month lows, despite the US Dollar being softer.

Market Insights and Projections

Additional market insights focus on commodities like silver, which bounced back after a significant round of profit-taking. In the crypto market, Bitcoin, Ethereum, and Ripple paused their upward trends near important levels. Looking ahead to 2026, projections highlight key brokers in different regions and what they offer. Resources also include detailed guides for trading EUR/USD, gold, and brokers offering Islamic and swap-free accounts. FXStreet provides informative content but does not endorse it as investment advice. They stress the need for independent research and advise caution regarding investment risks. FXStreet does not guarantee the accuracy or timeliness of the information and is not liable for any investment-related losses. Germany’s inflation reaching the 2% target in December is significant. It confirms the disinflation trend we have been observing throughout the last quarter of 2025. This gives the European Central Bank a clear opportunity to consider cutting interest rates sooner than anticipated.

Eurozone Economic Outlook

This is not just a story about Germany. The overall Eurozone inflation rate dropped to 2.4% last month. Recent business surveys from late 2025 showed that the manufacturing sector is still shrinking, which supports the case for easing monetary policy. This economic weakness makes it hard for the ECB to justify keeping rates high for much longer. For us, this indicates preparing for a weaker Euro against the dollar in the upcoming weeks. We should consider buying put options on the EUR/USD, as this provides a controlled way to bet on a decline toward the 1.1500 level. Implied volatility for Euro options might be too low, presenting a chance before the market fully anticipates a more aggressive ECB. The difference in policy becomes evident when comparing the Euro to the British Pound. While we expect the ECB to adopt a dovish stance, UK inflation data from the end of 2025 remained stubbornly above 3.5%. This could lead to further weakness in the EUR/GBP pair, making short positions through futures or options appealing. Create your live VT Markets account and start trading now.

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