EURUSD falls significantly below 1.1100 on dismal Eurozone preliminary Purchasing Managers’ Index data for September.

In Monday’s European session, the EURUSD sees heavy selling pressure and goes below the critical support level of 1.1100. The major currency pair is weakening due to a number of headwinds, including disappointing Eurozone Purchasing Managers’ Index (PMI) data for September and a significant recovery in the US Dollar.

The Eurozone Composite PMI unexpectedly dropped to 49.0. Economists predicted that overall economic activity would have expanded at a slower rate, to 50.6 from 51.0 in August. A sharp contraction. Overall economic activity was primarily driven by weakening in the manufacturing sector and a slower expansion of service sector activity.

Dr. Cyrus de la Rubia, Chief Economist of Hamburg Commercial Bank, commented on the flash PMI statistics, stating, “The eurozone is heading towards stagnation.” After the Olympic effect temporarily helped France, the eurozone’s largest economy, the Composite PMI plummeted in September to its lowest level in 15 months. The index has slipped below the expansionary level. Given the quick fall in new orders and the order backlog, it is not difficult to imagine the economy contracting any further.

ECB policymakers appear to be increasingly concerned that inflation will persist.

Signs of further deterioration would increase market speculation about a third interest rate drop by the European Central Bank (ECB). In October. Meanwhile, recent statements from ECB policymakers suggest that they are more concerned about price pressures remaining persistent. ECB policymakers have highlighted the need for fresh data indicating a further fall in inflation. On Friday, ECB Vice President Luis de Guindos stated that he would want to see more positive inflation data before lowering interest rates further. “We will have more information in December than in October,” she said.

Daily market movers: EURUSD declines amid several headwinds.

EURUSD falls dramatically as the US Dollar (USD) gains ground, despite rising anticipation that the Federal Reserve (Fed) would continue to choose for a larger-than-usual 50 basis points (bps) interest rate cut in the November meeting, as delivered last Wednesday, amid growing concerns. over job growth. According to the CME FedWatch tool, the probability of the Fed cutting interest rates by 50 basis points to 4.25%-4.50% in November has risen to 51.7% from 29.3% a week ago.

Markets expect the Fed to decrease interest rates for the second time in a row by 50 basis points.

On the contrary, the most recent Reuters poll of economists suggests that the central bank would decrease federal funds rates by 25 basis points at each of its monetary policy meetings in November and December.

Meanwhile, Fed Governor Michelle Bowman delivered a statement on Friday outlining why she opposed the decision to start the policy-easing cycle with a 50-basis-point rate decrease. Bowman, which decided to begin the rate-cutting process with a 25 basis point decrease, said a higher reduction could stoke overall demand given that inflationary pressures have failed Not restored to the bank’s 2% objective.

On the economic data front in the United States (US), investors will be looking for preliminary S&P Global Purchasing Managers’ Index (PMI) data for September at 13:45 GMT. The report expected to reveal that the Manufacturing PMI rose to 48.5 from 47.9 in August, but remains below the 50.0 level. In the same time, the services PMI is expected to fall to 55.2 from 55.7.