Euro Slips Below 1.1200 as US Dollar Strength Persists
The Euro fell back below 1.1200 against the US Dollar on Monday, dropping 0.60% as the Greenback maintained its strength. Despite a slight dip in the Institute for Supply Management (ISM) Services PMI to 54.9 in September, the US services sector remains in expansion territory. The S&P Global Services PMI was revised higher to 58.8, signaling continued economic resilience. However, political instability and fiscal concerns in Europe are adding downward pressure on the Euro.
US Treasury yields remain near multi-year highs, with the 10-year yield hovering around 5.30%. While the recent weaker-than-expected US employment report reduced the likelihood of a Federal Reserve rate hike in October to around 20%, persistent inflation risks keep the possibility of further tightening on the table. The divergence between the US economy's strength and Europe's political and fiscal uncertainties is weighing heavily on the EUR/USD pair.
On the European front, the Eurozone Composite PMI rose to 53.1 in September, indicating an acceleration in private-sector activity. However, this improvement has not been enough to counter the Euro's decline against a robust US Dollar. Political turmoil in France and Spain, along with bond market tensions, are exacerbating the Euro's challenges. The EUR/USD pair is trading around 1.1190, with technical indicators suggesting further downside pressure in the short term.