Euro Drops As Eurozone PMI Disappoints

(RTTNews) - The euro weakened against its most major counterparts in the European session on Monday, as the bloc's business activity contracted more than expected in July, raising the risk of a recession in the second half of the year.

Survey results from S&P Global showed that the flash composite output index fell to 48.9 in July from 49.9 in June, reaching an eight-month low. The reading was forecast to drop to 49.7.

The HCOB services PMI eased to 51.1 in July from 52.0 in June. The reading was below forecast of 51.5.

The manufacturing PMI slid to a 38-month low of 42.7 in July from 43.4 in June. The score was seen at 43.5.

The European Central Bank is due to announce the interest rate decision on Thursday. The ECB is also expected to raise borrowing costs by 25 bps and reiterate its commitment to continue the current hiking cycle.

The euro fell to near 2-week lows of 1.1065 against the greenback and 1.4611 against the loonie, off its early 4-day highs of 1.1146 and 1.4719, respectively. The next possible support for the currency is seen around 1.09 against the greenback and 1.44 against the loonie.

The euro dropped to 1.6426 against the aussie and 1.7862 against the kiwi, off an early 5-day high of 1.6559 and near a 3-month high of 1.8069, respectively. The currency may locate support around 1.61 against the aussie and 1.74 against the kiwi.

The euro touched 0.9588 against the franc, its lowest level since September 2022. Should the currency slides further, 0.94 is likely seen as its next downside target level.

The euro was down against the yen, at 156.35. The currency is likely to face support around the 143.00 level.

Looking ahead, U.S. PMI reports for July are slated for release in the New York session.