• Inflation in Germany declined at a stronger pace than expected in December.
• EUR/USD continues to trade deep in negative territory below 1.0550.

Inflation in Germany, as measured by the Consumer Price Index (CPI) declined to 8.6% in December's flash estimate from 10% in November. This reading came in lower than the market expectation of 9%. On a monthly basis, the CPI was down 0.8% in December.

Meanwhile, the Harmonised Index of Consumer Prices (HICP), the European Central Bank's (ECB) preferred gauge of inflation, edged lower to 9.6% on a yearly basis from 11.3%, compared to analysts' estimate of 10.7%.

Market reaction

EUR/USD showed no immediate reaction to these figures and the pair was last seen losing 1.2% on the day at 1.0535.