## German HICP Data: What to Expect from the Preliminary Inflation Announcement and Its Implications for EUR/USD

The foreign exchange market keeps a close eye on Germany, where the release of critical preliminary inflation figures is approaching. At 13:00 GMT today, the Federal Statistical Office will reveal the (HICP) for December, an indicator that could reshape expectations about the European Central Bank's monetary policy.

### The Numbers the Market is Expecting

Annual inflation is expected to reach 2.2%, marking a slowdown from November's 2.6%. On a monthly basis, a 0.4% increase is projected, contrasting with the 0.5% contraction in the previous month. These preliminary movements have already been glimpsed through regional reports: Brandenburg, Hesse, Saxony, and North Rhine-Westphalia have shown moderate year-over-year growth in their price indices, although monthly inflationary pressure has gained strength. Bavaria and Baden-Württemberg will complete the picture next Wednesday.

### Why Germany Matters for All of Europe

The significance of these data extends beyond German borders. As the largest economy in the Eurozone by population and trade volume, today's preliminary figures serve as a compass to decipher the inflation outlook for the entire region. On Wednesday, Eurostat will publish its own HICP data for the Eurozone, but today's German reading will set the tone for the prior analysis.

### The Technical Reaction of EUR/USD to Inflation

Ahead of the announcement, EUR/USD is trading under pressure, retreating 0.11% and hovering around 1.1717. On the four-hour chart, the pair's behavior reflects a defensive stance: it remains significantly below the 20-period Exponential Moving Average, which is at 1.1726 with a downward trajectory. This setup suggests that momentum continues to tilt toward weakness in the short term.

### Technical Patterns Under Scrutiny

The Double Top pattern observed in the price action indicates resistance formation, limiting gains. The 14-period RSI stands at 46, a neutral territory that shows erosion of bullish momentum. Two technical scenarios become relevant: if the pair remains below its descending moving average, bears could head toward the December 2025 low near 1.1600. Conversely, a decisive break above the December 16 high at 1.1804 would open the door toward the September 2025 high at 1.1919.

_(This technical analysis was generated with the assistance of AI tools.)_