Eurozone PMI Data Reveals Continued Economic Weakness

The Euro Area economy continues to struggle, with business activity falling at a steeper rate in December and output declining at its fastest rate in 11 years. The Eurozone is likely to enter a recession in the coming weeks. The European Central Bank (ECB) has kept rates steady and pushed back against market expectations of rate cuts in 2024. However, if the Euro Area falls into recession and inflation continues to fall, the ECB may have to reconsider its stance on interest rates. The weakness in the US dollar has accelerated after the Federal Reserve signaled potential rate cuts in 2024. EUR/USD touched a four-month high but failed to break above 1.1000 after weak PMI data was released.