Italy Consumer Price Index (YoY) came in at 1.2%, above forecasts (1.1%) in December

💡 DMK Insight

Italy’s CPI hitting 1.2% is a wake-up call for traders: inflation’s not done yet. This uptick, surpassing the forecast of 1.1%, signals that the European Central Bank (ECB) might maintain its hawkish stance longer than anticipated. For traders, this could mean continued volatility in the euro and related forex pairs. If inflation persists, we might see the ECB pushing rates higher, which could strengthen the euro against currencies like the USD. Watch for how this impacts the EUR/USD pair, especially if it breaks above key resistance levels. But here’s the flip side: if inflation starts to cool down in the coming months, we could see a shift in sentiment, leading to a weaker euro. Keep an eye on upcoming economic data releases for further clarity. The immediate focus should be on the next ECB meeting and any hints they drop regarding future rate hikes. Traders should monitor the 1.10 level on EUR/USD as a critical pivot point in the near term.