US ISM Manufacturing PMI Overview
The Institute of Supply Management (ISM) will release its latest manufacturing business survey result, also known as the ISM Manufacturing PMI at 15:00 GMT this Monday. The index is anticipated to have ticked higher to 58.8 in February from the 58.7 previous, marking expansion for the ninth straight month.
Joseph Trevisani, Senior Analyst at FXStreet explains: “Business executives have been cautiously optimistic for several months, investing but not hiring. While January's near record run in US Retail Sales and the looming end of the pandemic may suggest that that the recovery is at hand, employment will likely remain restrained for some time.”
How could it affect EUR/USD?
Ahead of the key release, the US dollar was back in demand and dragged the EUR/USD pair to one-and-half-week lows, further below mid-1.2000s. An upbeat reading will further fuel expectations for a relatively stronger US economic recovery and might be enough to provide an additional lift to the greenback. Conversely, the market reaction to a softer reading is more likely to remain limited. This, in turn, suggests that the path of least resistance for the major remains on the downside.
Meanwhile, Valeria Bednarik, Chief Analyst at FXStreet provided a brief technical outlook for the major and offered important technical levels to trade: “The EUR/USD pair is trading below the 38.2% retracement of its November/January rally at 1.2060, the immediate resistance level. The near-term picture is bearish, as EUR/USD is developing below all of its moving averages, with the 20 SMA accelerating south above the larger ones. Technical indicators hover near oversold readings, partially losing their bearish strength as the pair bounced from daily lows. Nevertheless, the risk remains skewed to the downside, with the next Fibonacci support at 1.1970.”
About the US ISM manufacturing PMI
The Institute for Supply Management (ISM) Manufacturing Index shows business conditions in the US manufacturing sector. It is a significant indicator of the overall economic condition in the US. A result above 50 is seen as positive (or bullish) for the USD, whereas a result below 50 is seen as negative (or bearish).
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