The euro declined against the dollar on Monday after disappointing euro zone business activity data, fueling expectations of further interest rate cuts by the European Central Bank (ECB) this year. A survey revealed that business activity in the euro zone unexpectedly contracted, with the services sector stagnating and manufacturing worsening. Germany’s economic decline deepened, and France’s growth slowed after a temporary boost in August. Traders now anticipate increased chances of ECB rate cuts, with expectations rising to around 44 basis points of easing this year.

Meanwhile, the U.S. dollar index rose slightly, maintaining its strength following a recent one-year low. In the UK, the pound remained steady after a survey showed a slowdown in business growth, though less severe than in the euro zone. The yen weakened against the dollar, as the Bank of Japan (BOJ) left interest rates unchanged, pausing its recent gains. Political uncertainty in Japan, with a leadership vote looming, adds complexity to the BOJ’s policy outlook.