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Figure Heloc 
Prior +2.1%Core CPI +2.3% vs +2.3% y/y prelimPrior +2.4%The key statistic here is core annual inflation, which continues to hold above the 2% threshold for now. As such, that will keep the ECB sidelined in waiting on their next potential policy move. As mentioned before, the main sticking point at this stage is Germany mostly and that will continue to keep policymakers on edge as we get into the new year.Looking at the breakdown, food price inflation remains elevated as well at around 2.5% with services inflation clearly still the standout at 3.4% in December. In looking at the contributions to the headline inflation number:Food, alcohol, & tobacco +0.49%Energy -0.18%Non-energy industrial goods +0.09%Services +1.54%
This article was written by Justin Low at investinglive.com.
💡 DMK Insight
Core CPI holding at 2.3% is a big deal for traders right now. With inflation stubbornly above the ECB’s 2% target, the central bank’s hands are tied, delaying any rate hikes. This could lead to increased volatility in the eurozone markets, particularly affecting the euro against the dollar. Traders should watch for potential reactions in forex pairs like EUR/USD, especially if the core inflation figures trend higher or lower in the coming months. If the ECB remains sidelined, we might see a stronger dollar as U.S. economic data continues to support Fed rate hikes. Keep an eye on the 1.05 level for EUR/USD; a break below could signal further downside. On the flip side, if inflation starts to cool, it could give the ECB room to act sooner than expected, which might shift market sentiment quickly. So, monitor upcoming inflation reports closely, as they could shift the narrative significantly.
📮 Takeaway
Watch the 1.05 level in EUR/USD; a break below could signal further downside as ECB remains sidelined due to persistent inflation.
