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 for October at 14:00 GMT this Tuesday. The index is anticipated to show the slowest growth in the manufacturing sector since 2020 and fall to the neutral 50.0 mark, separating expansion and contraction. The data will provide a fresh update on the state of the US economy amid rising borrowing costs and the potential easing of inflationary pressures.

How could it affect EUR/USD?

Ahead of the key release, the US dollar meets with a fresh supply amid speculations that the Fed will slow the pace of rate hikes by the end of this year amid the worsening outlook for the US economy. A weaker-than-expected ISM Manufacturing PMI will add to worries and continue weighing on the greenback, which should allow the EUR/USD pair to capitalize on its intraday positive move.

Conversely, a stronger print is unlikely to impress the USD bulls amid a generally positive risk tone and hopes for a less hawkish Fed. This, in turn, suggests that the path of least resistance for the EUR/USD pair is to the upside. The immediate market reaction, however, is more likely to remain limited ahead of the highly-anticipated FOMC monetary policy decision on Wednesday.

Valeria Bednarik, Chief Analyst at FXStreet, offers a brief technical overview and outlines important technical levels to trade the major: “The EUR/USD pair trades near a daily high of 0.9947 and is mildly bullish, according to the daily chart. The Momentum indicator resumed its advance near overbought readings, while the RSI indicator bounced from around its midline, still within neutral levels. At the same time, the pair develops above a directionless 20 SMA, currently at 0.9840, while a bearish 100 SMA provides dynamic resistance at around 1.0070.”

“The bullish potential seems limited in the near term, and according to the 4-hour chart. The pair is advancing above converging 100 and 200 SMAs, which currently hover around 0.9835. The 20 SMA, in the meantime, heads firmly lower a few pips above the current level. Finally, technical indicators advance with uneven strength but remain below their midlines. Bulls may have better chances if the pair runs past 0.9965, Monday’s high and the immediate resistance level. The 0.9830/40 price zone provides support in case the dollar resumes its advance,” Valeria adds further.

Key Notes

  •  EUR/USD Forecast: Pausing dollar bulls help the pair to bounce

  •  EURUSD Forecast: Bulls wake up as US Dollar loses strength amid risk flows

  •  EUR/USD looks firm and regains the 0.9900 mark and above ahead of US data

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).