Euro Falls for Third Day as Eurozone PMI Slows and France Contracts

The euro fell against the U.S. dollar for a third straight session on Friday, October 23, 2026, after preliminary surveys showed business growth in the euro zone slowing to a four-month low and activity in France shrinking. EUR/USD traded around 1.1200, down 0.12%, at 14:29 GMT, FXStreet reported, as stronger U.S. survey data and expectations for further Federal Reserve tightening supported the dollar.

Euro zone growth slows

The S&P Global Flash Eurozone Composite PMI Output Index fell to 51.9 in October from 53.1 in September, its lowest reading since June and below all forecasts in a Reuters poll, which had predicted 52.7, Reuters reported. A reading above 50 indicates growth. Input costs in the currency bloc accelerated for a second month on higher energy, fuel and transport costs, while hiring came close to a standstill and business confidence fell to a five-month low. New export orders rose for a third consecutive month, following nearly four and a half years of continuous monthly declines.

France stood out. The French composite flash PMI dropped to 48.4 from 51.1, below a Reuters poll forecast of 50.5, as services fell to 48.4 from 51.2 and manufacturing to 49.3 from 50.6, according to Reuters. "September's rebound in economic activity proved to be short-lived, which is hardly surprising given the rapid tightening of financial conditions and a further increase in political pressure across France during October," said Joe Hayes, senior principal economist at S&P Global Market Intelligence. French government borrowing costs have risen in recent weeks on concerns about the country's finances. Growth in Germany, the euro zone's largest economy, also softened.

The European Central Bank is expected to hold its deposit rate at 2.50% next week and raise it by 25 basis points in December, according to a Reuters poll conducted earlier this month.

U.S. data supports the dollar

S&P Global's flash U.S. manufacturing PMI rose to 56.0 in October from 55.9, above expectations of 55.6 and the highest in 53 months, while the services PMI was 57.9, in line with forecasts, FXStreet reported. Markets are pricing an approximately 80% chance of another Fed rate increase in December, and the central bank's next policy decision is due on Wednesday, followed by a press conference from Fed Chair Kevin Warsh.

The dollar index rose 0.13% to 101.75 on Friday, iEconomy reported. In the same tracking, USD/CHF rose 0.31% to 0.8230, USD/JPY added 0.20% to 157.09, GBP/USD fell 0.17% to 1.3377 and EUR/GBP edged up 0.02% to 0.8372. The Bank of Japan recorded the dollar at 156.95-97 yen and the euro at $1.1198-99 at 17:00 Tokyo time.

Sterling slips despite strong survey

The British pound traded 0.1% lower at around 1.3380 against the dollar during European hours, FXStreet reported, even though the U.K. flash composite PMI rose to 53.1 in October from 52.0 in September, beating expectations of 51.8. Reuters described it as the strongest month for British business activity since February.

Official figures released earlier on Friday showed U.K. retail sales fell 0.4% in September from August, a steeper drop than the 0.1% decline economists had expected, while August's growth was revised up to 0.7% from 0.5%, according to the Office for National Statistics data cited by FXStreet. Reuters reported that higher fuel prices weighed on household budgets and that GfK's consumer confidence measure posted its sharpest month-on-month fall since early in the COVID-19 pandemic. GBP/USD had reached a monthly high of 1.3419 on Thursday, with markets expecting an interest rate increase from the Bank of England, FXStreet said.

What comes next

Currency traders are watching a run of central bank meetings next week, including the Fed's decision on Wednesday and the ECB's meeting on Thursday, along with U.S. personal consumption expenditures inflation data due on October 29.