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 15:00 GMT this Monday. Consensus estimate point to a modest slowdown in the pace of growth in the manufacturing sector activity. The index is seen slipping to 50.4 for February from the previous month’s reading of 50.9 – still marking expansion for the second consecutive month.
How could it affect EUR/USD?
Ahead of the important release, the EUR/USD pair built on last week’s strong gains and jumped to near seven-week tops, levels beyond the 1.1100 round-figure mark. A surprisingly stronger reading might provide some respite to the US dollar and prompt some profit-taking, albeit any negative reaction is likely to remain limited.
Alternatively, a weaker reading will reinforce expectations that the Fed will cut interest rates at its upcoming policy decision on March 18. This should eventually exert some additional downward pressure on the already weaker greenback and continue driving the pair higher. However, slightly overbought conditions on short-term charts might keep a lid on any runaway rally.
Meanwhile, Yohay Elam, NDDFX’s own Analyst, offered important technical levels to trade the EUR/USD pair: “Resistance awaits at 1.1120, which served as a cap in January. Next, 1.1170 is the upside target.”
“Support is at 1.1050, a swing high from Friday. It is followed by a temporary cap of 1.1010 and the ephemeral support line of 1.0980 also seen late last week. Next, the swing low of 1.0950 is next,” Yohay added further.
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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).