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. The gauge is expected to hold steady at 58.7 in February and the New Orders Index is projected to fall to 55.4 from 61.8 in the previous month. The employment sub-component is also expected to have fallen to 51.7 from 55.2 in January.
Meanwhile, Joseph Trevisani, Senior Analyst at FXStreet is upbeat about the recovery in the services sector and explains: "The unexpected optimism of manufacturing executives could carry over into the much larger services sector as the US exits the pandemic era, and the economy revs into recovery despite the dour outlook from analysts."
How could it affect EUR/USD?
Ahead of the key data, a sudden pick up in the US Treasury bond yields underpinned the US dollar demand and prompted some fresh selling around the EUR/USD pair. An upbeat reading will reinforce the narrative of a relatively faster US economic recovery and further benefit the greenback. Conversely, the market reaction to a weaker reading is likely to remain muted amid expectations that a massive US fiscal spending plan would spur growth. Hence, the path of least resistance for the pair seems to be on the downside.
Valeria Bednarik, Chief Analyst at FXStreet offered a brief technical outlook and important technical levels to trade the major: "The EUR/USD pair trades in the 1.2050 price zone, poised to extend its decline. The 4-hour chart shows that it met sellers around its 100 and 200 SMA, now back below a bearish 20 SMA. Technical indicators turned south and are back within negative levels indicating increased bearish interest. Further declines are to be expected on a break below 1.2015, the immediate support."
Key Notes
• US ISM Services PMI February Preview: Expect more than expected
• EUR/USD Forecast: Dollar picks up as Treasury yields resume advance
• EUR/USD Forecast: End to calm? Dollar set to storm the board with new shots in the arm
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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