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Fundamental Forex Analysis

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 15:00 GMT this Monday. Consensus estimate point to a modest recovery in the manufacturing sector activity and the index is seen rebounding from the previous month’s reading of 47.2 to 48.5 in January – still marking the sixth consecutive month of contraction.

Meanwhile, analysts at TD Securities expect the manufacturing ISM index to be lifted back toward 50 in January by more positive sentiment following the Phase One trade deal. “We expect that lift to offset negative news on Boeing. Even at 50, our forecast is relatively weak in an absolute sense, but it would be up from 47.8 in December (and 47.2 in the original report). Most of the regional manufacturing surveys that have been reported for January have signaled improvement, with the Chicago survey the main exception.”

How could it affect EUR/USD?

Any positive surprise might provide an additional boost to the already stronger US dollar and continue exerting some downward pressure on the major. Alternatively, a weaker reading might reinforce expectations that the Fed will ease monetary policy further and prompt some USD selling, albeit the negative reaction is likely to remain limited.

Meanwhile, NDDFX’s own Analyst Yohay Elam offered important technical levels to trade the EUR/USD pair: “EUR/USD is battling 1.1065, which was a stubborn support line in December. Next, 1.1040 capped it during January and is also where the 50 SMA hits the price. 1.1020 and 1.0990 are next. Some resistance awaits at 1.1075, a support line from January, and then 1.1095, Friday’s high. It is followed by 1.1120 and 1.1145.”

Key Notes

  •   US Manufacturing PMI Preview: Trade takes back seat to the virus

  •   EUR/USD Forecast: Coronavirus gives, coronavirus takes away, downtrend resistance looms

  •   EUR/USD Price Analysis: Strong resistance emerged at 1.1090/95

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).

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