The preliminary German and Eurozone flash HCOB Purchasing Managers’ Index (PMI) data for December will be released today at 08:30 and 09:00 GMT. These reports are very important for the European currency, as they reveal the economic health of Germany and the Eurozone as a whole. For Germany, the flash Composite PMI is expected to show a small drop due to slower activity in the service sector but will still remain above 50.0. The Services PMI is predicted to decrease to 52.8 from 53.1, while the Manufacturing PMI may show a slower contraction at 48.5, down from 48.2. In the Eurozone, the flash Composite PMI is expected to improve, with the Services PMI rising to 53.9 from 53.6, and manufacturing cooling slightly to 49.9 from 49.6. Currently, EUR/USD is stable around 1.1750, influenced by indicators like the 20-day EMA at 1.1658 and a 14-day RSI at 70.22. The 61.8% retracement level at 1.1747 is a key point for potential upward movement. Germany’s economy heavily influences the Euro through its GDP, employment, and inflation figures. The country has been a leader in maintaining financial stability in the Eurozone, impacting policy through the Bundesbank and shaping economic governance. German Bunds are considered a safe investment option in Europe. As we await the German and Eurozone flash PMI data, we will pay close attention to the expected differences between services and manufacturing. The consensus suggests a slight weakening in the German composite figure, while the broader Eurozone measure is expected to improve. This data will be crucial for testing the Euro’s recent strength. The services sector has been a major driver of the Eurozone economy, so another strong reading could increase inflationary pressures. Recent data from Eurostat for November 2025 showed core inflation sticking at 3.8%, making the European Central Bank’s policy decisions more complicated. Therefore, a surprisingly strong services PMI could postpone any expectations for rate cuts in the first half of 2026. In Germany, we are particularly focused on the manufacturing number, even if it’s still in contraction. After the deep manufacturing recession of 2023 and 2024, any sign of recovery would be very positive for the market. A reading above the expected 48.5 could give the Euro a quick boost. With the EUR/USD nearing overbought levels and an RSI close to 70, traders should be cautious about chasing the rally. If the PMI data is stronger than expected, it could drive prices toward the 1.1823 resistance level, making call options appealing to capture further upside while managing risk. However, if the data disappoints, current positioning might lead to a quick retreat toward the 20-day EMA around 1.1658. This situation isn’t just about Europe; recent data from the US is also encouraging for a stronger Euro. Last week’s initial jobless claims for early December 2025 were 235,000, which was higher than expected, signaling some softness in the US labor market. If this trend continues, it may put pressure on the US Dollar. We will also monitor how German Bund yields react as a confirmatory signal. Stronger economic data should push yields higher, generally benefiting the Euro as it creates a wider rate differential against other currencies. If yields do not rise on positive news, it could signal trouble for Euro bulls. A key level for risk management is the 20-day EMA at around 1.1658. A daily close below this level would indicate that recent bullish momentum is weakening. This would prompt us to reconsider our long positions and possibly consider put options to protect against a deeper correction toward the 1.1600 level.

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