When is the US ISM Services PMI and how could it affect EUR/USD?
|US ISM Non-Manufacturing PMI Overview
The Institute of Supply Management (ISM) will release the Non-Manufacturing Purchasing Managers' Index (PMI) - also known as the ISM Services PMI – at 14:00 GMT this Tuesday. The gauge is expected to have edged higher to 63.5 in June from 64 previous. Conversely, the employment sub-component is anticipated to rise to 57 during the reported month as compared to 55.3 in May. The key focus, however, will be on the Prices Paid sub-component, which represents inflation and is expected to ease to 79.3 in June from 80.6 previous.
How Could it Affect EUR/USD?
Ahead of the key data, the EUR/USD pair witnessed a turnaround from the vicinity of the 1.1900 mark and moved well within the striking distance of multi-month lows touched on Friday. A plunge in the German ZEW Economic Sentiment Index was seen as a key factor that weighed on the shared currency. A stronger report might provide a modest lift to the US dollar and exert some additional pressure on the major.
Meanwhile, investors now seem convinced that the Fed will wait longer before tapering its asset purchases or raising interest rates might cap gains for the greenback. A softer reading will reaffirm market expectations and act as a headwind for the greenback. This, in turn, should extend some support to the major and help limit any deeper losses, suggesting that the market reaction to the report is more likely to be limited.
Meanwhile, Valeria Bednarik, Chief Analyst at FXStreet offered a brief technical outlook: “The EUR/USD pair offers a neutral-to-bearish stance. The 4-hour chart shows that the pair is comfortable below a directionless 20 SMA, while the longer ones extend their declines above it. Technical indicators are flat, the Momentum around its midline and the RSI within negative levels, anticipating another leg lower on a break below 1.1800.”
Key Notes
• ISM Services PMI Preview: Why the inflation component could trigger a dollar rebound
• EUR/USD Forecast: Pressure mounts, poised to challenge 1.1800
• EUR/USD Price Analysis: Another visit to 1.1800 remains on the cards
About the US ISM Services PMI
The ISM Non-Manufacturing Index released by the Institute for Supply Management (ISM) shows business conditions in the US non-manufacturing sector. It is worth noting that services constitute the largest sector of the US economy and result above 50 should be seen as supportive for the USD.
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