When is the US ISM Manufacturing PMI and how could it affect EUR/USD?

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 14:00 GMT this Monday. The index is anticipated to edge higher to 60.9 in July from 60.6 previous, pointing to robust expansion in the manufacturing sector activity. Given that the Fed looks more at the labour market and inflation than growth, investors will keep a close eye on the Employment and Prices Paid sub-component.

How could it affect EUR/USD?

Ahead of the key release, the US dollar languished near one-month lows touched last week speculations that the Fed will wait for a longer period before slowing its massive monetary support. This, in turn, assisted the EUR/USD pair to regain positive traction on Monday and climb back closer to the 1.1900 round-figure mark. A softer reading will reaffirm dovish Fed expectations and exert some additional downward pressure on the already weaker greenback.

Conversely, a stronger reading might be overshadowed by the risk-on impulse in the market, which should hold traders from placing any aggressive bullish bets around the safe-haven USD. This, in turn, suggests that the path of least resistance for the major remains up. That said, any immediate market reaction is more likely to remain limited as the market focus will remain glued to Friday's release of the closely-watched US monthly jobs report – NFP.

Meanwhile, Valeria Bednarik – Chief Analyst at FXStreet – offered a brief technical outlook and important technical levels to trade the major: "The EUR/USD pair traded as high as 1.1896 and currently hovers around 1.1880. The near-term picture is neutral-to-bullish, as long as the pair holds above the 1.1840 level, the immediate support. The 4-hour chart shows that it is holding above all of its moving averages, with the 20 SMA heading firmly higher above the longer ones. However, technical indicators lack directional strength, although they stand within positive levels. The bullish case will be firmer if the pair breaks above 1.1920, the 61.8% retracement of its March/May rally."

Key Notes

  •  EUR/USD Forecast: Consolidating just below 1.1900

  •  EUR/USD Price Forecast: A move beyond 1.1900 remains likely

  •  EUR/USD Price Analysis: Extra gains seen above 1.1908

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).