The prospects of a rate hike for next month are being cut now, falling to ~52% from around ~65% before we got to the PMI readings today. The euro is sliding lower especially after the German PMI data here, which shows the steepest decline in business activity since May 2020.
The pair was holding around 1.0860 ahead of the data but has now fallen to a low of 1.0810 at time of writing, and puts into focus key support near 1.0800 as outlined earlier here.
That will be a big test for the euro in the days to come, as the ECB will have a lot on its plate to try and sort out. While the headlines may show worsening economic conditions, the prices data from the PMI readings are actually showing that core prices are being more stubborn. That is not what the ECB would like right now.
Going back to the euro, things are going to look dicey if we do get a break below 1.0800 and below the 200-day moving average (blue line) at 1.0797. It'll be a case of "look out below" if we do catch a break under that threshold.
