German GDP Stabilizes in 2024, Euro Remains Unfazed

The Euro has demonstrated significant buying momentum this month despite weak Eurozone data, such as today’s Q2 German GDP report, which showed a 0.1% drop. EUR/USD has risen above 1.12, breaking out of its year-long trading range. Despite this upward movement, the Euro has shown weakness against the GBP, as buyers have encountered significant resistance at the descending trendline. This year, EUR/GBP faced resistance at the 100-week SMA (red) and eventually fell below the 0.84 level.

German GDP contracted by -0.1% in Q2

Last week, EUR/USD climbed to 1.1201, breaking above the 200-week SMA, which had previously acted as resistance in July 2023, and surpassing the December 2023 high of 1.1140. The pair is now approaching the 2023 high of 1.1275, and it remains to be seen whether buyers can reach and sustain this level. The recent rise in EUR/USD has been driven by increased risk appetite after breaking above the 2024 high of 1.1043, as well as weaker US economic data, which has fueled expectations of a Fed rate cut in September.

However, there are clear signs of a struggling Eurozone economy, highlighted by last week’s disappointing PMI surveys and the final Q2 German GDP report. These mixed signals suggest that while the EUR/USD pair may continue its upward trend in the short term, the overall economic outlook remains uncertain.

German Q2 GDP Report (Final Reading)

  • Quarter-on-Quarter (QoQ) GDP for Q2 (seasonally adjusted): Increased by 0.1%, exceeding the expected decline of -0.1%. This indicates a slight growth in the German economy compared to the previous quarter.
  • Year-on-Year (YoY) GDP for Q2 (non-seasonally adjusted): Recorded a growth of 0.3%, matching expectations. This suggests that the economy maintained a modest pace of growth over the past year.
  • Year-on-Year (YoY) GDP for Q2 (seasonally adjusted): Showed no change at 0.0%, which was better than the anticipated -0.1% decline. This stability indicates that the German economy is not contracting as feared.

German GfK Consumer Climate for August

  • August Consumer Climate Index: Came in at -22 points, which is significantly lower than the expected -18.2 points. This drop indicates worsening consumer sentiment and suggests that households are becoming more cautious about spending amid economic uncertainties.
  • July Consumer Sentiment: Initially reported at -18.4 points, it has been revised down to -18.6 points. This downward revision further reflects a decline in consumer confidence, highlighting ongoing concerns about economic conditions in Germany.

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Skerdian Meta
Lead Analyst
Skerdian Meta Lead Analyst. Skerdian is a professional Forex trader and a market analyst. He has been actively engaged in market analysis for the past 11 years. Before becoming our head analyst, Skerdian served as a trader and market analyst in Saxo Bank's local branch, Aksioner. Skerdian specialized in experimenting with developing models and hands-on trading. Skerdian has a masters degree in finance and investment.
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