The remarkable, bullish run of the euro was temporarily distorted on the dollar's recent upsurge coupled with poor economic data in the Eurozone. Germany and France – the largest and second-largest economies in the Euro Area, respectively – reported significant contractions in their industrial activities in August. The reported slump in French Services and Manufacturing PMI in addition to the sizable fall in German Services PMI is inlined with ECB's projections for a long and uneven road to recovery.
Another contributing factor to the depreciation of the euro was the 9.7 per cent economic crunch in Germany, which was registered in Q2. Despite a marginal revision upwards from the initially recorded 10.1 per cent crunch from the preliminary data, the shock was still sizable enough to exert extra pressure on the Euro.