German PMI Points Towards Shallow Downturn

Euro Analysis

  • German manufacturing and services sectors register meagre surprise to the upside
  • EUR/USD rises but pulls back to levels observed ahead of the release
  • Few catalysts this week point to potentially lower volatility as markets speculate on 2024 rate cutting cycle
  • The analysis in this article makes use of chart patterns and key support and resistance levels. For more information visit our comprehensive education library

German manufacturing PMI preliminary data beat the consensus view of 41.2, coming in at 42,3 to mark a partial recovery in what has been a steady contraction thus far. The services sector also outperformed against expectations, coming in at 48.7 vs the anticipated 48.5 figure.


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The slight improvement does not alter the economic outlook for Germany but may be a sign of a less severe GDP contraction expected in Q4. A return to growth (readings above 50) appears as a possibility for the aggregated reading, the composite data point, before 2H next year but growth still remains weak. Germany has miraculously avoided a technical recession in 2023 after prior quarterly GDP prints revealed stagnant and sometimes negative GDP growth.

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Immediate Market Reaction

The EUR/USD 5-minute chart revealed an immediate move higher after the release but has since pulled back to levels observed in the moments before the print.

EUR/USD 5-Min Chart


Source: TradingView, prepared by Richard Snow

EUR/USD has enjoyed a period of rising prices as the USD lets off some steam. Trading above the 200 SMA, the pair appears to have found resistance at the 1.0929 level (longer-term level of consideration) and may test 1.0831 if the euro fails to build on bullish momentum. The economic calendar is comparatively light this week meaning there appear to be few catalyst apart from the FOMC minutes on Wednesday and central bank speakers on either side of the Atlantic.

EUR/USD daily chart


Source: TradingView, prepared by Richard Snow

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— Written by Richard Snow for

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