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 15:00 GMT this Wednesday. Consensus estimates point a steady and match the previous month's stronger-than-expected reading of 55.
Meanwhile, analysts at TD Securities forecast the ISM non-manufacturing index to rise modestly to 55.3 in Jan following an already-stronger print in Dec. “If confirmed, this should further support USD dominance over low-yielders such as the EUR.”
How could it affect EUR/USD?
Ahead of the release, the pair was seen extending its recent pullback and remained well within the striking distance of challenging the key 1.10 psychological mark. A stronger reading might be enough to provide an additional boost to the US dollar and continue exerting pressure on the major. Conversely, the market reaction is likely to be muted in case of a slightly disappointing reading. However, a big miss might prompt the USD bulls to take some profits off the table and provide some immediate respite to the major.
Valeria Bednarik, FXStreet's own Chief Analyst, offered the technical set-up and important levels to trade the major – “The EUR/USD pair is trading at daily lows near the 1.1000 level ahead of Wall Street’s opening, clearly bearish in the short-term. The 4-hour chart shows that it has extended its decline below all of its moving averages, in line with the strong selling interest. Technical indicators, in the meantime, head firmly south, nearing oversold levels. The pair has bottomed in January at 1.0991, although a stronger support comes at 1.0980 a relevant low from last November. The bearish momentum will likely increase on a break below this last.”
Key Notes
• US ISM Non-Manufacturing PMI January Preview: Manufacturing to the fore
• EUR/USD Forecast: More falls ahead? Coronavirus turning to a win-win for the dollar, data eyed
• EUR/USD New York Price Forecast: Euro under pressure, challenging 1.1016 support
About the US ISM Non-Manufacturing 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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