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 Thursday. The index is anticipated to edge lower to 61 in June from 61.2 previous, still point to robust expansion in the manufacturing sector. Given that the Fed looks more at the labour market and inflation than growth, investors will keep a close eye on the Employment and Prices Paid sub-component. The Employment Index is expected to jump to 53 from 50.9 in May and the Prices Paid Index is forecast to slip to 87 in June from 88 in May.

How could it affect EUR/USD?

Ahead of the key data, a modest US dollar pullback from the highest level since April 8 assisted the EUR/USD pair to gain some positive traction. That said, the Fed's surprise hawkish shift at the end of the June policy meeting might continue to act as a tailwind for the USD and cap gains for the major.

A stronger ISM print will further fuel speculations that the Fed will tighten its monetary policy earlier if price pressures continue to intensify. This should be enough to provide a goodish lift to the greenback and prompt fresh selling around the pair.

Conversely, the market reaction to softer reading is more likely to be muted as investors might prefer to wait on the sidelines ahead of Friday's release of the closely watched US jobs report (NFP). This, in turn, suggests that the path of least resistance for the EUR/USD pair is to the downside.

Meanwhile, Yohay Elam, FXStreet's own analysis provided a brief technical outlook for the EUR/USD pair: “Euro/dollar has bounced off the lows, pushing the Relative Strength Index (RSI) on the four-hour chart away from the 30 levels – thus far from oversold conditions and allowing for more falls. Momentum remains to the downside and the currency pair trades under the 50, 100 and 200 simple moving averages.”

Yohay also offered important technical levels to trade the major: “Support awaits at 1.1855, which capped EUR/USD before its most recent rise. It is followed by 1.1837, the new trough. Further down, 1.18 and 1.1760 await. Some resistance is at the daily high of 1.1885, followed by 1.1910, which is where the 50 SMA hits the price. The next levels to watch are 1.1950 and 1.1975.”

Key Notes

  •  US ISM Manufacturing June Preview: Expansion to continue but how severe is the labor shortage?

  •  EUR/USD Forecast: Sell opportunity? Dollar decline looks short-lived, technicals point lower

  •  EUR/USD Price Analysis: Solid contention emerged around 1.1830

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).