When are the German/ Eurozone flash PMIs and how could they affect EUR/USD?

German/ Eurozone flash PMIs Overview

Amongst the Euro area economies, the PMI reports from Germany and Eurozone as an entire bloc hold more relevance, in terms of its impact on the European currency and the markets as well.

The forecast for the Eurozone flash manufacturing PMI shows 59.8 for December, slightly lower than the 60.1 recorded a month ago, and the Eurozone services sector is expected to come in a tad firmer at 56.0 in the reported month when compared to 56.2 booked in October.

The flash manufacturing PMI for Germany is expected to tick lower to 62.0 when compared to the final 62.5 result booked previously. While, the index for the services sector is expected to improve to 54.6 in December, against 54.3 last.

How could affect EUR/USD?

A positive surprise in the manufacturing PMI reports could add extra legs to the ongoing rally in the EUR, opening doors for a test of 1.1837/44 (20-DMA/ post-FOMC highs), beyond which 1.1900 levels could be tested, paving way for a test of 1.1950 (psychological levels). 

On the flip side, if the readings show a big-than expected drop, the spot could drop below 1.1810/00 (100-DMA/ round number), below which 1.1788 (5 DMA) and 1.1754 (50-DMA) could be tested.

The reaction to the PMI releases may remain limited, as the main risk event for the EUR markets remains the ECB monetary policy decision and Draghi’s speech at the presser due for release post-1245 GMT. 

Key notes

EUR/USD Forecast: bulls eyeing a move beyond mid-1.1800s, focus shifts to ECB

EURUSD: Traded a 1.1728/1.1830 range on Wednesday

About German/ Eurozone flash PMIs

The Manufacturing Purchasing Managers Index (PMI) released by the Markit Economics captures business conditions in the manufacturing sector. As the manufacturing sector dominates a large part of total GDP, the manufacturing PMI is an important indicator of business conditions and the overall economic condition in the Euro Zone. Usually, a result above 50 signals is bullish for the EUR, whereas a result below 50 is seen as bearish.