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

US ISM Services 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 Tuesday. The gauge is expected to fall to 66.9 in December from 69.1 recorded in the previous month. The market focus, however, will be on the Prices Paid sub-component, which represents inflation and is expected to edge higher to 83.6 from 82.3 in November.

How Could it Affect EUR/USD?

Against the backdrop of surprisingly hawkish FOMC meeting minutes released on Wednesday, a stronger print should be enough to provide a fresh lift to the US dollar. Conversely, the market reaction to any disappointment is more likely to be muted amid expectations for an eventual Fed liftoff in March 2022. Apart from this, elevated US Treasury bond yields should continue to underpin the greenback. This, in turn, suggests that the path of least resistance for the EUR/USD pair is to the downside.

Meanwhile, Eren Sengezer, Editor at FXStreet, offered a brief technical outlook for the EUR/USD pair: “The Relative Strength Index (RSI) indicator on the four-hour chart dropped below 50 following the sharp U-turn late Wednesday. Confirming the bearish shift in the near-term outlook, EUR/USD is trading below the 200-period and 100-period SMAs, which form resistance around 1.1300.”

Eren also outlined important technical levels to trade the major: “On the downside, the next support aligns at 1.1270 (static level) before 1.1240 (static level) and 1.200 (psychological level). In case buyers manage to lift the pair back above 1.1300 and hold it there, 1.1320 (50-period SMA) could be seen as the next resistance before 1.1340 (static level) and 1.1360 (post-ECB high).”

Key Notes

  •  EUR/USD Forecast: FOMC Minutes remind sellers of Fed-ECB policy divergence

  •  EUR/USD continues to hover above 1.1300 in defiance of calls for USD strength post-hawkish Fed minutes

  •  EUR/USD: No change to the mixed outlook – UOB

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 results above 50 should be seen as supportive for the USD.