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 ease from a four-month high level of 61.1 to 60.4 in October, still pointing to robust growth in the manufacturing sector activity. Given that the Fed looks more at the labour market and inflation than growth, investors will also keep a close eye on the Employment and Prices Paid sub-component.

How could it affect EUR/USD?

Ahead of the key release, the risk-on mood prompted some profit-taking around the safe-haven US dollar and assisted the EUR/USD pair to move away from over two-week lows touched on Friday. That said, elevated US Treasury bond yields should help limit the USD losses. A stronger headline print will reaffirm hawkish Fed expectations and revive the USD demand, capping the upside for the major.

Conversely, a weaker reading is likely to be overshadowed by prospects for an early policy tightening by the Fed, which should continue to act as a tailwind for the greenback. This, in turn, suggests that the path of least resistance for the EUR/USD pair remains to the downside and the attempted recovery move runs the risk of fizzling out rather quickly.

Meanwhile, Valeria Bednarik – Chief Analyst at FXStreet – offered a brief technical outlook and important technical levels to trade the major: "According to the 4-hour chart, the bearish case is still in place, despite the ongoing recovery. The pair stands below all of its moving averages, with the 20 SMA crossing below the 100 SMA. Technical indicators, in the meantime, hold within negative levels, with neutral-to-bearish stances. The pair needs to break below 1.1523, the year low, to resume its decline, aiming then to 1.1470, a long-term static support area."

Key Notes

  •  EUR/USD Forecast: Focus remains on inflation and central banks

  •  EUR/USD Forecast: Euro bears retain control in quiet start to the week

  •  EUR/USD Price Analysis: Defends critical daily support line amid light trading

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).