Make sure your circle is a vector path that is not filled. You can check that out by seeing if you can turn the engrave into a cut. If it is filled and doesn’t have a defined stroke, you can still to the cut by choosing that option rather than engrave.
If the circle is a raster/bitmap file, then it can’t be cut.
Read through this tip post.
Here are some vectors that you can save and upload for cutting operations.
