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 Tuesday. The index is anticipated to retain its strong levels and hold steady at 60.7 in May, pointing 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.
How could it affect EUR/USD?
Ahead of the key data, a strong pickup in the US Treasury bond yields extended some support to the US dollar and capped any meaningful upside for the EUR/USD pair. A stronger-than-expected report would revive speculations that the Fed would taper its bond-buying program sooner rather than later and provide a fresh lift to the greenback. Conversely, a softer print could weigh on the buck, though the downside is likely to remain limited ahead of Friday's closely-watched US monthly jobs report (NFP). Nevertheless, any significant divergence from the expected readings should infuse some volatility in the market.
Meanwhile, Yohay Elam, FXStreet's own analysis provided a brief technical outlook for the EUR/USD pair: “Euro/dollar has recaptured the 50 Simple Moving Average on the four-hour chart in its latest upswing, a bullish sign joining positive momentum.”
Yohay also offered important technical levels to trade the major: “Some resistance awaits at 1.2245, the former triple top that capped EUR/USD in May. It is followed by the peak of 1.2266, and then by 1.23. The currency pair has some support at 1.22, which capped it late last week. Further down, 1.2180, 1.2160 and 1.2130 all played roles in recent weeks and serve as additional cushions.”
Key Notes
• ISM Manufacturing PMI Preview: NFP Hint? Inflation component to steal the show, rock the dollar
• EUR/USD Forecast: Eurozone reopening, potential US cooldown, bullish charts all point higher
• EUR/USD Price Analysis: Upside could extend to 1.2265/70
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).