Euro dips further as German PMI also disappoints

<p>EUR/USD is slipping further to 1.0950 levels from around 1.0970 earlier after the French PMI data, as the German PMI data <a href="https://www.forexlive.com/news/germany-december-flash-manufacturing-pmi-431-vs-432-expected-20231215/" target="_blank" rel="follow">here</a> confirms a recession in Europe to end the year. The pair does have some large option expiries at 1.0950, so that could limit losses in the session ahead before the expiries roll off.</p><p>As for euro sentiment, this is a bit of a tough one as the ECB is caught in a bit of a bind. On the one hand, they can't quite declare victory on the inflation front just yet. And even the PMI data from Germany also suggests that to be the case. The details:</p><ul><li>Input prices rising at its quickest pace in seven months</li><li>Operating expenses for service providers rose by the greatest extent since May, owing to wage pressures and general inflation</li><li>Average prices charged for goods and services at its highest in seven months, back above long-term average</li><li>Falling manufacturing costs saw its slowest rate of decline since April</li></ul><p>On the other, the economy is showing signs of slowing down further. Fortunately, it's still pointing towards a shallower recession overall but it's best not to get too complacent.</p><p>That presents quite a bit of a conundrum for the ECB, especially if CPI data in the months ahead do not reflect a falling trend but instead a more persistent one around 3% to 4%.</p>

This article was written by Justin Low at www.forexlive.com.