Germany’s annual CPI inflation rate remained stable at 2.3% in February, aligning with market expectations. The monthly CPI increased by 0.4%, following a 0.2% decline in January.

The Harmonised Index of Consumer Prices, the preferred measure for the European Central Bank, also rose by 2.8% year-on-year, unchanged from January’s rate.

Additionally, the EUR/USD exchange rate showed no immediate reaction to this inflation data and was trading marginally higher at around 1.0400.

Germany’s annual inflation rate held steady at 2.3% in February, exactly as expected. The 0.4% month-on-month increase follows January’s 0.2% drop, suggesting that prices picked up some momentum at the start of the year. Meanwhile, the Harmonised Index of Consumer Prices, the gauge closely watched by policymakers in Frankfurt, remained at 2.8% compared to the same period last year. Inflation isn’t accelerating, but there’s certainly no further progress towards lower levels either.

Despite the release, the common currency showed little reaction. EUR/USD barely moved, hovering just above 1.0400. Given how closely market participants monitor inflation data, this suggests that traders had already priced in the steady reading.

What does that mean for our approach in the coming weeks? Stability in German prices keeps broader expectations for the euro area intact, providing little reason to adjust assumptions just yet. However, we need to remain mindful of what comes next from policymakers. If inflation refuses to budge, arguments for holding rates higher for longer retain their strength. On the other hand, any indication of further cooling could refuel bets on easing later this year.

For now, positioning should factor in that certainty is still lacking. Short-term fluctuations might be limited, but positioning ahead of the next hints from those in charge will be where opportunities arise. Keeping an eye on how forecasts shift and how that plays into broader economic expectations will be important.