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

Haresh Menghani FXStreet

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 14:00 GMT this Wednesday. The gauge is expected to edge higher to 58.5 in March from 55.3 previous. The employment sub-component is also expected to have risen to 53.9 during the reported month as compared to 52.7 in February.

As Joseph Trevisani, Senior Analyst at FXStreet explains: "The US economy seems to have broken free of its pandemic restraints in March with manufacturing optimism at a four-decade high, payrolls adding nearly one million workers and unemployment at a 12-month low. The excellent and unexpected March Manufacturing PMI results should be duplicated in the service sector. "

How Could it Affect EUR/USD?

Ahead of the key release, the upbeat market mood was seen undermining the safe-haven US dollar and extended some support to the EUR/USD pair. A stronger reading will further lift expectations for a relatively faster US economic recovery from the pandemic and provide a goodish boost to the greenback. Conversely, a negative print is more likely to be overshadowed by the optimism over the Biden administration's infrastructure spending plan of more than $2 trillion. This suggests that the path of least resistance for the greenback remains to the upside. That said, relatively thin liquidity conditions might hold traders from placing aggressive bets and help limit any deeper losses for the major.

From current levels, immediate support is pegged near the 1.1700 mark. A sustained break below will be seen as a fresh trigger for bearish traders and turn the pair vulnerable to accelerate the fall towards the 1.1620-15 support area en-route the 1.1600 round-figure mark. On the flip side, any meaningful upside is likely to confront a stiff resistance near the 1.1800 mark. However, a sustained move beyond might prompt some near-term short-covering move and push the pair towards the very important 200-day SMA, currently near the 1.1860 region.

Key Notes

• US Services Purchasing Managers’ Index March Preview: Expectations are high

• EUR/USD Forecast: Not out of the woods yet, remains vulnerable to slide further

• EUR/USD remains confined in a range, flat-lined around mid-1.1700s

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.

Author

Haresh Menghani

FXStreet

Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.

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