Piece written by Alexa Smith, Trive Financial Market Analyst
The Euro Area’s HCOB Services PMI inched upwards to 48.4 for September from 47.9 the previous month. Although exhibiting a slight uptick, Europe’s service sector remains in contractionary territory for its second consecutive month. The principal driver behind this downturn was the most pronounced contraction in new business activity since the onset of the global pandemic, casting a shadow over the European Central Bank’s (ECB) decision to implement higher interest rates.
Simultaneously, Europe’s HCOB Manufacturing PMI fell from 43.5 to 43.4, tipping further into contraction. Meanwhile, Germany’s HCOB Manufacturing PMI exhibited a slight uptick but remains far from expansion, reporting a figure of 39.8 from 39.1 in August. However, Germany’s HCOB Services PMI experienced a notable surge, increasing from 47.3 to 49.8. The GER 40 Futures (EUREX: FDAX) have been plagued by woeful macroeconomic conditions in Germany and Europe as a whole; is recovery eminent?
The GER 40 Futures consolidated rangebound between the 15598 support and the 16045 resistance at the 50% level, but a gap up encouraged a breakout shy of the Golden Ratio. However, the upward momentum was short-lived as the index futures tumbled towards the 15598 support, which could pose a significant barrier for a downtrend.
If a breakdown of the 15598 support occurs, selling volume could promote a pullback towards the 15515 major support. However, a trickle into oversold levels could see the 15598 support hold, which could bolster the index futures towards the 16170 resistance at the Golden Ratio.
The GER 40 Futures fell below the moving averages due to woeful macroeconomic conditions in Germany and Europe as a whole. Since the index futures find themselves at the lower boundary of the range, a move down could encourage a pullback towards the 15515 major support. However, the 15598 support could hold and bolster the index futures towards the Golden Ratio on oversold conditions.
Sources: TradingView, Trading Economics