EUR/USD Supported as German PMI Returns to Growth at 51.2 in July

EUR/USD is finding support as Germany's composite PMI climbed back into expansion territory at 51.2 in July, beating the 49.8 consensus and ending a three-month contraction spell. The manufacturing sector led the recovery with a PMI of 52.2, significantly above the 50.5 expected and prior 50.3, while services improved to 49.6 from 48.6, though remaining in contraction. Phil Smith of S&P Global noted the German economy made a positive start to Q3, with manufacturing production driving the turnaround following disruptions from earlier geopolitical tensions. The manufacturing outperformance is particularly notable for Germany's export-oriented economy, suggesting improved global demand conditions may be filtering through. While the services sector remains a relative weak spot, the upward trajectory is encouraging. For EUR/USD traders, the German data reinforces the broader Eurozone recovery narrative. However, the ECB's primary focus on inflation rather than activity data means rate expectations may not shift materially on this release alone.