Euro Drops Below 1.1200 as US Dollar Strength Persists

The Euro has dropped below 1.1200 against the US Dollar, marking a 0.60% decline on Monday. The EUR/USD pair is trading around 1.1190 as the Greenback gains strength, bolstered by rising US Treasury yields. The US Dollar's momentum is partly driven by resilient economic activity, despite a slightly weaker-than-expected Institute for Supply Management (ISM) Services PMI for September, which fell to 54.9 from 55.4 in August.

The S&P Global Services Purchasing Managers Index (PMI) was revised slightly higher to 58.8 in September, signaling continued expansion in the US economy. However, the Federal Reserve's potential interest rate hike in October has seen its likelihood drop to around 20%, down from nearly 70% a week earlier. Persistent inflation risks, particularly in the services sector and energy prices, complicate the Fed's efforts to reduce inflation to its 2% target.

US Treasury yields remain near multi-year highs, with the 10-year yield holding around 5.30%. While this supports the US Dollar, concerns over US debt and fiscal position could limit the Greenback's prolonged appreciation. In Europe, political and fiscal uncertainties, particularly in France and Spain, are weighing heavily on the Euro, despite some encouraging economic data.

The HCOB Eurozone Composite PMI rose to 53.1 in September, up from 52, indicating an acceleration in private-sector activity. However, this improvement has not been enough to counteract the Euro's decline against the stronger US Dollar. The EUR/USD pair continues to face bearish pressure, with technical indicators suggesting further downside potential.