Yesterday's data from S&P Global showed that in December of this year, private sector activity in the eurozone increased less than expected, as Germany's manufacturing sector unexpectedly deteriorated.

According to the data, the eurozone composite Purchasing Managers' Index (PMI) fell to 51.9 from 52.8 in November, while remaining above the 50 threshold that separates expansion from contraction.

Germany emerged as the main weak link, with manufacturing output falling to a ten-month low, while the services sector also delivered disappointing results. In contrast, French indicators surprised analysts by recording the strongest growth in more than three years.

The decline in the eurozone PMI points to a slowdown in growth momentum in the region, although it continues to signal expansion. Particularly concerning is the downturn in Germany, the largest economy in the eurozone, which may indicate looming challenges for the entire bloc. The decline in manufacturing and the weakening of Germany's services sector raise concerns about the sustainability of economic growth in the region. Despite these figures, the European Central Bank is unlikely to have to consider further changes to monetary policy.

The slight weakening of the PMI index may be linked to several factors, including U.S. tariffs, underlying inflation, interest rates, and geopolitical uncertainty. These factors are weighing on consumer demand and business investment, leading to slower economic growth. While in the short term the eurozone economy is expected to continue slowing as negative factors persist, over the longer term the region's economy may return to sustainable growth. Everything will depend on the ECB's ability to skillfully balance the fight against inflation with support for economic growth.

It is evident that Europe is demonstrating resilient growth despite trade shocks and geopolitical tensions. After a solid third quarter, the economy is expected to slow somewhat in the final months of 2025 before resuming growth in the new year.

"The composite PMI for the eurozone as a whole confirms the assumption that the economy is holding up impressively despite U.S. tariffs, although it is still far from rapid growth. This will allow the ECB to keep interest rates unchanged this week, but inflation prospects will complicate such a decision next year," the report said.

Reports published on Tuesday by the ZEW Institute indicated that forecasts for the state of the German and eurozone economies unexpectedly jumped. "Expansionary fiscal policy is providing new momentum," said ZEW President Achim Wambach. "However, the economic recovery remains fragile. Measures to resolve prolonged trade conflicts, geopolitical tensions, and a lack of investment are also likely to be included in the reform agenda for 2026."

As for the current technical picture of EUR/USD, buyers now need to think about how to take the 1.1750 level. Only this would allow a move toward a test of 1.1770. From there, a climb to 1.1800 would be possible, but doing so without support from major players would be quite difficult. The most distant target would be the high at 1.1835. In the event of a decline, I expect any serious action from large buyers only around the 1.1715 level. If no one shows up there, it would be better to wait for a retest of the 1.1685 low or open long positions from 1.1650.

Regarding the current technical picture of GBP/USD, pound buyers need to take the nearest resistance at 1.3385. Only this would allow a move toward 1.3420, above which breaking through would be rather difficult. The most distant target would be the 1.3450 level. In the event of a decline, bears will attempt to regain control over 1.3340. If they succeed, a break of the range would deal a serious blow to bullish positions and push GBP/USD toward the 1.3320 low, with the prospect of moving on to 1.3285.