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 15:00 GMT this Thursday. The index is expected to show a contraction in the manufacturing sector activity during November and fall below the 50 mark for the first time since June 2020. Given that the Fed looks more at inflation than growth, investors will keep a close eye on the Prices Paid sub-component, which is anticipated to edge higher from 46.6 in October to 47.5 during the reported month.

How could it affect EUR/USD?

Ahead of the key release, the US Dollar drops to a nearly four-month low on Thursday in the wake of the overnight dovish remarks by Fed Chair Jerome Powell. A weaker-than-expected ISM Manufacturing PMI will be seen as another sign of a slowdown in the US economy and exert additional downward pressure on the greenback. This, in turn, should assist the EUR/USD pair to capitalize on its intraday positive move beyond the very important 200-day SMA.

Conversely, a stronger print is unlikely to provide any respite to the USD bulls amid rising bets for a less aggressive policy tightening by the Fed. This, in turn, suggests that the path of least resistance for the USD is to the downside and supports prospects for a further near-term appreciating move for the EUR/USD pair.

Valeria Bednarik, Chief Analyst at FXStreet, offers a brief technical overview and outlines important technical levels to trade the major: “The EUR/USD pair daily chart shows that the pair has advanced above its 200 Simple Moving Average (SMA), while the 20 SMA accelerated north below the longer one, reflecting increased buying interest. The Momentum indicator keeps heading lower within positive territory amid a weak daily opening, while the Relative Strength Index (RSI) consolidates at around 64. Overall, the risk is skewed to the upside, although the pair needs to clear its recent high at 1.0496 to confirm a sustainable rally.”

“The 4-hour chart favors another leg higher, although additional confirmations are needed. The pair is developing above all of its moving averages, with the 20 SMA picking up above bullish longer ones. Technical indicators, however, have lost their directional strength and stand pat within positive levels. Whether EUR/USD can storm through 1.0500 will depend on the upcoming US first-tier figures,” Valeria adds further.

Key Notes

  •  EUR/USD: Break above 1.05 could open the door to an extended rebound up toward 1.08 – MUFG

  •  EUR/USD outlook: The Euro keeps firm tone on weaker dollar, improved economic data

  •  EUR/USD: High volatility still in play

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).