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 have edged down to 52 in July from 53 in the previous month. The gauge will provide a fresh update on the manufacturing sector activity and the health of the economy amid growing worries about a possible recession.

According to Yohay Elam, Senior Analyst FXStreet: “The Prices Paid component in the ISM Manufacturing PMI is even more important and remains sky high. Despite dropping to 78.5 points in June, the indicator is at extremely high levels -- and projected to climb back to 81.”

How could it affect EUR/USD?

Ahead of the key release, the US dollar dropped to its lowest level since July 5 amid diminishing odds for more aggressive rate hikes by the Fed. A weaker data would be enough to reinforce expectations and exert additional downward pressure on the greenback. Conversely, the reaction to better-than-expected data is more likely to be short-lived and might do little to impress the USD bulls. That said, the EUR/USD pair, so far, has been struggling to make it through the 1.0275-1.0285 supply zone, making it prudent to wait for strong follow-through buying before placing fresh bullish bets.

Eren Sengezer, Editor at FXStreet, outlined important technical levels to trade the major and also offered a brief technical outlook: “EUR/USD was last seen trading slightly above 1.0230, where the Fibonacci 38.2% retracement level of the latest downtrend forms the upper limit of the two-week-old trading range. In case the pair manages to stabilize above that level, it could target 1.0300 (psychological level, Fibonacci 50% retracement, 200-period SMA on the four-hour chart) and 1.0370 (Fibonacci 61.8% retracement). In the meantime, the Relative Strength Index (RSI) indicator on the four-hour chart holds above 50, suggesting that sellers remain on the sidelines for the time being.”

“On the downside, supports are located at 1.0200 (psychological level, 50-period SMA, 20-period SMA), 1.0150 (Fibonacci 23.6% retracement, 100-period SMA) and 1.0100 (psychological level, static level),” Eren added further.

Key Notes

  •  ISM Manufacturing PMI: Dollar to dominate in duel between inflation and employment components

  •  EUR/USD Forecast: Euro needs to start using 1.0230 as support to extend rebound

  •  EUR/USD Price Analysis: Further upside needs to clear 1.0280

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).