Euro inches lower following HCOB PMI data from Germany
- EUR/USD moves little following the release of weaker German PMI data.
- Germany’s June manufacturing PMI flatlined at 50.0, while the services PMI disappointed by tumbling to 46.8.
- The US dollar stays strong as traders expect the Federal Reserve to keep interest rates higher for longer.
EUR/USD held ground after registering modest losses in the previous day, trading around 1.1430 during the European hours on Tuesday. However, the pair withdraws its daily gains following the release of HCOB Purchasing Managers Index (PMI) data from Germany. Traders will likely shift their attention toward Eurozone PMI data due later in the day.
Germany’s preliminary HCOB Manufacturing PMI flatlined at 50.0 in June, matching forecasts after a 50.1 reading in May and leaving the sector stuck on the threshold between expansion and contraction. Meanwhile, the Services PMI disappointed, dropping to 46.8 from May's 48.1 and missing the 48.7 market expectation.
The upside of the EUR/USD pair is likely capped as the US Dollar (USD) remains stronger amid hawkish sentiment surrounding the Federal Reserve's (Fed) policy outlook. Last week’s Federal Open Market Committee (FOMC) Economic Projections report, which revealed that nine out of 19 policymakers foresee a rate increase in 2026. Momentum grew further after Kevin Warsh, presiding over his first meeting as Fed Chair, caught the market off guard by adopting a significantly more hawkish stance than anticipated.
Market pricing heavily reflects this outlook, with the CME FedWatch tool indicating an 85% probability of at least a 25-basis-point rate hike before the year ends. To gauge the next steps for US monetary policy, investors are closely watching Thursday’s release of the May Personal Consumption Expenditure (PCE) Price Index, the Fed's preferred inflation metric.
Economic Indicator
HCOB Manufacturing PMI
The Manufacturing Purchasing Managers Index (PMI), released on a monthly basis by S&P Global and Hamburg Commercial Bank (HCOB), is a leading indicator gauging business activity in Germany’s manufacturing sector. The data is derived from surveys of senior executives at private-sector companies. Survey responses reflect the change, if any, in the current month compared to the previous month and can anticipate changing trends in official data series such as Gross Domestic Product (GDP), industrial production, employment and inflation. As Europe’s main manufacturing hub, German PMI data can also be a bellwether of the sector’s health in the broader continent. The index varies between 0 and 100, with levels of 50.0 signaling no change over the previous month. A reading above 50 indicates that the manufacturing economy is generally expanding, a bullish sign for the Euro (EUR). Meanwhile, a reading below 50 signals that activity among goods producers is generally declining, which is seen as bearish for EUR.
Read more.Last release: Tue Jun 23, 2026 07:30 (Prel)
Frequency: Monthly
Actual: 50
Consensus: 50
Previous: 50.1
Source: S&P Global
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