Italy’s Consumer Price Index (CPI) rose by 1.2% year-on-year in December, according to European Union standards, which aligns with earlier predictions. In other economic news, the US government reported a record budget deficit of $144.75 billion in December. This deficit is a 68% increase compared to December 2024, even with higher tariff revenues. Meanwhile, gold and cryptocurrencies experienced significant changes, with gold stabilizing around $4,600 and Bitcoin holding above $95,400 after a 5% increase over the week.

Foreign Exchange Market Activity

In the foreign exchange market, GBP/USD climbed above 1.3400 as the US dollar weakened amid improved market sentiment. The EUR/USD remained resilient, staying above 1.1600 due to fresh US dollar supply and stable market conditions. The new callout feature on the Pump.fun platform led to a 5% increase in its value, following a 3% drop the day before. This feature aims to boost creator engagement on the Solana-based platform, possibly increasing trading activity. Despite potential profits, FXStreet warns of the inherent risks in trading and investing. Readers should thoroughly research their financial decisions. The publication does not accept liability for any mistakes or investment results.

Low Inflation Trend Across Eurozone

Italy’s 1.2% consumer price increase highlights the low inflation trend across parts of the Eurozone. In late 2025, Eurostat’s preliminary estimate for the Eurozone was around 2.4%, showcasing a clear difference between member countries. This mixed economic situation makes it unlikely that the European Central Bank will raise interest rates soon, limiting the Euro’s potential for growth. The rally of the US dollar is losing momentum, largely due to the significant government deficit. The December deficit of $144.75 billion continues a trend from 2025, when the year’s total deficit exceeded $2.1 trillion, according to the Congressional Budget Office. This financial strain may encourage traders to use put options on the dollar index to speculate on further weakness. Currently, the EUR/USD pair is holding above 1.1600, though volatility is low as various factors are at play. With uncertainty surrounding the Fed’s next move and the ECB remaining stable, the pair may stay within a range in the near term. This environment is suitable for selling options strangles to earn premium while betting that no major movements will happen in the coming weeks. Gold is retreating from its recent highs near $4,600 as the immediate risk of conflict in Iran seems to be lessening. A similar spike and drop occurred during the Red Sea tensions in early 2025, indicating that this “geopolitical premium” can disappear quickly. If the US dollar continues to weaken, it may provide some support for gold, but the main influence right now is the improving market sentiment. Create your live VT Markets account and start trading now.

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