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 Wednesday. The index is anticipated to edge down to 54.5 in May from 55.4 in the previous month. The gauge will provide a fresh update on the manufacturing sector activity and the health of the economy as a whole amid signs of slowing global growth.

As Joseph Trevisani, Senior Analyst at FXStreet, explains: “The drastic drop in new orders in the last four months suggests that the US consumer has already begun to pullback on discretionary spending for factory goods. Manufacturing is considered a leading indicator for the economy as a whole. The decline does not bode well for second quarter growth.”

How could it affect EUR/USD?

Ahead of the key release, rising US Treasury bond yields offered some support to the US dollar, which, in turn, dragged the EUR/USD pair lower for the second successive day. A stronger US macro data could result in even higher US bond yields and a stronger USD. Conversely, the weaker-than-expected print would fuel concerns about softening economic growth. This could dampen the risk sentiment and underpin the greenback's safe-haven status. This suggests that the path of least resistance for the pair is to the downside.

Eren Sengezer, Editor at FXStreet, offered a brief technical outlook and outlined important technical levels to trade the major: “The ascending trend line coming from mid-May reinforces the 1.0700 psychological level. Although the pair dropped that support several times on Tuesday, it is yet to post a four-hour close below it. In case that happens, sellers could show interest and trigger an extended slide toward 1.0660 (static level) and 1.0620 (200-period SMA).”

“On the upsşde, the 20-period SMA forms interim resistance at 1.0740 ahead of 1.0780 (static level) and 1.0800 (psychological level),” Eren added further.

Key Notes

  •  US ISM Manufacturing PMI May Preview: Gloom persists despite an US expanding economy

  •  EUR/USD Forecast: Sellers could take action if 1.0700 support fails

  •  EUR/USD set to retest its recent lows close at the 1.0350 mark – Rabobank

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).