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 from 57.1 in the previous month to 57.6 in April. The gauge will provide a fresh update on the manufacturing sector activity and the health of the economy as a whole amid signs of slowing global growth.
How could it affect EUR/USD?
Ahead of the release, the US dollar stood tall near a multi-year high touched last week and remained well supported by the prospects for a faster policy tightening by the Fed. A stronger than expected report will reaffirm market bets and offer additional support to the buck. Conversely, any reaction to a softer print might do little to dent the underlying bullish sentiment surrounding the buck. Apart from this, concerns about the potential economic fallout from the Ukraine crisis should act as a headwind for the shared currency. This, in turn, suggests that the path of least resistance for the EUR/USD pair is to the downside.
Valeria Bednarik, Chief Analyst at FXStreet, offered a brief technical outlook for the pair: “The EUR/USD pair is down from an intraday high of 1.0567, and the daily chart shows that the risk remains skewed to the downside. The 20-SMA heads firmly lower, far above the current level, while the longer ones maintain their bearish slopes above the shorter one. Technical indicators have recovered modestly but remain within oversold levels without signs that could confirm an interim bottom.”
Valeria also outlined important technical levels to trade the EUR/USD pair: “According to the 4-hour chart, the risk is also on the downside. The pair is unable to break above a bearish 20-SMA, which currently stands a few pips above the current level. The Momentum indicator is struggling to reenter positive territory while the RSI indicator consolidates around 37, indicating absent buying interest. Bears are likely to resume acting on a break below the 1.0500 level, with the ultimate bearish target at 1.0339, the January 2017 monthly low.”
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).
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.