The German economy contracted over the last two quarters, which is defined as a technical recession. Q1 GDP, revised a second time, came in at -0.3%. This follows Q4 2022's GDP of -0.5%. Germany has faced considerable challenges following Russia's invasion of Ukraine and the subsequent choice made by European leaders to sever relations with Moscow.
Private consumption was a major drag, reeling from high retail energy prices. It fell 1.2% over the period. German manufacturing has also disappointed with its manufacturing PMI remaining below 50 (contraction zone) since July 2022. Moreover, aggressive tightening by the ECB is also a headwind for the economy.
The DAX has felt the pressure this week. Although, the primary trend remains up with a series of higher troughs followed by higher peaks, this week's candle is a bearish engulfing candle (blue arrow). It may be the beginning of a corrective move, especially if risk-off sentiment grows.
Senior Market Specialist
Russell Shor joined FXCM in October 2017 as a Senior Market Specialist. He is a certified FMVA® and has an Honours Degree in Economics from the University of South Africa. Russell is a full member of the Society of Technical Analysts in the United Kingdom. With over 20 years of financial markets experience, his analysis is of a high standard and quality.