The manufacturing sector has been in contraction in the Eurozone for quite some time. In fact, this sector has been in contraction throughout this year, since January’s PMI report fell below the break-even level at 50 points, which means that manufacturing is in recession in Europe.

Today’s manufacturing reports were expected to show a slight improvement for August, which would be a good sign since it would be the first improvement in several months. But, the German manufacturing fell to 41 points, which is the lowest level in a decade since the global economic crisis.

The Eurozone manufacturing PMI also declined further to 45.6 points, against 47.6 points expected. In France, manufacturing has been holding up well and hasn’t fallen into contraction yet, but today it slipped to 50.3 points, which is pretty close to stagnation.

Even services weakened further in Europe during August, so things are going from bad to worse in Europe. The Euro completed another bearish leg down, with EUR/USD falling around 60 pips. Now this pair has turned even more dovish and I will be waiting for a retrace higher in order to go short.