Prior +2.0%Core CPI +2.2% vs +2.2% y/y prelimPrior +2.3%No changes to the preliminary estimates. Compared with December 2025, annual inflation fell in twenty-three Member States, remained stable in one and rose in three.In January 2026, the highest contribution to the annual euro area inflation rate came from services (+1.45%), followed by food, alcohol & tobacco (+0.51%), non-energy industrial goods (+0.09%) and energy (-0.39%).ECB policymakers have been repeating they are in a “good place” on policy and they will not respond to small or short-term deviations from the 2% inflation target. The market is pricing just a 20% probability of a rate cut by year-end, and for that to rise, we will likely need a negative shock like another serious trade war with the US or a hawkish Fed pivot that triggers a selloff in stock markets.
This article was written by Giuseppe Dellamotta at investinglive.com.
๐ก DMK Insight
Core CPI holding steady at 2.2% is a mixed bag for traders: it signals stability but raises questions about future monetary policy. With inflation showing signs of moderation across the euro area, particularly in services, traders should keep an eye on how central banks might react. If inflation remains stable, it could lead to a more cautious approach from the ECB, impacting interest rates and, consequently, the euro’s strength against other currencies. This stability might also affect risk sentiment in equity markets, as investors weigh the implications for growth. Watch for any shifts in market expectations around ECB policy meetings, as they could trigger volatility in both forex and equity markets. However, donโt overlook the potential for a contrarian view: if inflation starts to creep back up in the coming months, it could lead to a hawkish pivot from the ECB, which would shake up the current market dynamics. Keep an eye on the 2.3% threshold as a potential breakout point for inflation expectations, which could influence trading strategies significantly.
๐ฎ Takeaway
Monitor the 2.3% inflation level closely; a breakout could signal a shift in ECB policy and impact euro trading strategies.





