Euro Drops Below 1.1200 Amid US Dollar Strength and European Turmoil

The Euro declined by 0.60% on Monday, slipping below 1.1200 against the US Dollar. This drop comes despite a softer-than-expected ISM Services PMI reading for September, which fell to 54.9 from 55.4 in August. The US Dollar's strength is driven by elevated Treasury yields, which remain near multi-year highs, with the 10-year yield hovering around 5.30%. Political instability in Europe, particularly in France and Spain, is also weighing on the Euro.

The latest S&P Global Services PMI was revised slightly higher to 58.8 in September, indicating continued expansion in the US services sector. However, the Federal Reserve's likelihood of raising interest rates in October has dropped to around 20%, down from nearly 70% a week earlier, following a weaker-than-expected employment report. Persistent inflation risks, especially in the services sector, complicate the Fed's efforts to control inflation.

In Europe, the Eurozone Composite PMI improved to 53.1 in September, suggesting stronger private-sector activity. However, these positive economic signals are not enough to counter the Euro's decline against a resilient US Dollar. Technical analysis shows EUR/USD trading around 1.1191, with bearish momentum keeping the pair below key moving averages, hinting at further downside pressure in the short term.