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EUR/USD SLIDES BELOW 1.1100 AS EUROZONE PMI SURPRISINGLY CONTRACTS

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  • EUR/USD falls sharply below 1.1100 on weak Eurozone preliminary Purchasing Managers’ Index data of September.
  • ECB policymakers appear to be increasingly concerned about inflation remaining persistent.
  • Markets expect the Fed to deliver a second consecutive 50 bps interest-rate cut in November.

EUR/USD faces sharp selling pressure and falls below the crucial support of 1.1100 in Monday’s European session. The major currency pair weakens on multiple headwinds: poor Eurozone Purchasing Managers’ Index (PMI) data for September and a sharp recovery in the US Dollar (USD).

The Eurozone Composite PMI surprisingly contracted to 49.0. Economists expected that activities in the overall economy to have grown at a slower pace to 50.6 from 51.0 in August. A sharp contraction in the overall economic activity was majorly driven by weakness in the manufacturing sector and a slower expansion in the service sector activity. 

Commenting on the flash PMI data, Dr. Cyrus de la Rubia, Chief Economist at Hamburg Commercial Bank, said, “The eurozone is heading towards stagnation. After the Olympic effect had temporarily boosted France, the eurozone heavyweight economy, the Composite PMI fell in September to the largest extent in 15 months. The index has now dipped below the expansionary threshold. Considering the rapid decline in new orders and the order backlog, it doesn't take much imagination to foresee a further weakening of the economy.



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