Nothing Good for the Euro As German Business Climate Resumes Deterioration
EURUSD broke below the support on Friday which was the low since 2022, after some horrible PMI figures from Germany and France, and other data such as today’s business climate offers nothing to support the Euro and stop the decline toward parity.
France and Germany, two of the Eurozone’s most influential economies, have become the primary sources of weakness for both the euro and the region’s overall economic health. Once drivers of growth, these nations are now contributing to a downturn that has intensified in recent months.
Eurozone Services Sector Falters Amid Industrial Decline
The Eurozone’s services sector, which had previously offered a buffer against the worsening industrial slump, is now showing signs of strain. Following several months of modest growth, activity in the services sector has started to contract, compounding the economic challenges faced by the region. This raises the probability of the Eurozone economy falling into a recession.
Germany’s Alarming November PMI Data
Germany’s latest Flash PMI figures highlight the depth of the economic issues. The manufacturing PMI, at 43.2, reflects a deepening recession in the industrial sector. Meanwhile, the services PMI fell sharply to 49.4 in November, down from 51.6 in October, marking its lowest point in nine months.
The combined downturn in both manufacturing and services underscores the mounting challenges for the Eurozone’s two largest economies and raises concerns about the region’s overall recovery trajectory.
EUR/USD Chart Daily – Persistent Weakness
Since early October, the EUR/USD pair has been under sustained pressure, with the euro losing nearly 9 cents from its recent highs. Last Thursday’s break below the 1.05 level signaled further bearish momentum. On Friday, the euro shed an additional 1.5 cents, driven by dismal manufacturing and services PMI data from the Eurozone.
ECB’s Economic Focus
The ECB’s recent pivot toward prioritizing economic stability aligns with the region’s deteriorating data. The ongoing weakness in the euro and sluggish economic activity strengthen the case for a more assertive approach to rate cuts as we move closer to 2025.
The likelihood of a 50 basis point rate cut by the European Central Bank (ECB) at its December meeting has risen significantly to 35%, based on current money market pricing. This marks a sharp increase from the less than 20% probability recorded before the release of weak PMI data from France and Germany.
German Business Climate for November![DEIFO]()
- Actual: 85.7
- Expected: 86.0
- Prior: 86.5
- Current Conditions Index:
- Actual: 84.3
- Expected: 85.4
- Prior: 85.7
- Expectations Index:
- Actual: 87.2
- Expected: 87.0
- Prior: 87.3
EUR/USD Live Chart
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