The German economy contracted a little less than expected in the third quarter of 2023, driven by lower household consumption, and revisions to previous quarters meant the economy avoided a recession previously reported last winter.
Germany's gross domestic product shrank 0.1% from July to September compared with the previous quarter, adjusted for price, seasonal and calendar variations, according to preliminary data from the country's statistics office released Monday.
The reading was slightly better than the 0.2% on-quarter contraction expected by economists in a poll by The Wall Street Journal.
Meanwhile, GDP was revised up in both the first and second quarters of this year. The economy grew 0.1% in the second quarter, a rise from the zero growth under previous data, and stagnated in the first, from 0.1% contraction, meaning Germany avoided the recession previously reported.
However, the German economy continues to face a difficult path to sustained growth, driven by a sluggish manufacturing sector. The European Commission expects German GDP to shrink by 0.4% in 2023 as a whole, according to its latest forecasts published in September.
ECB President Christine Lagarde confirmed that after an unprecedented campaign to raise borrowing costs, the bank plans to maintain the squeeze on the euro area for an extended period. A longer period of keeping rates high is an alternative to raising them.
She added that the economy is likely to face stagnation in the coming quarters, which will have a negative impact on EURUSD as well.
Overall Recommendation is to sell EURUSD in the short term.
The price zone of 1.010 – 1.045 may be the target for EURUSD.
Take profit or loss at the end of the current week.
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