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 Friday. The index is anticipated to decline from 56.1 in the previous month to 54.9 in June. The gauge will provide a fresh update on the manufacturing sector activity and the health of the economy amid growing worries about a possible recession.
According to Yohay Elam, Senior Analyst FXStreet: “The more important data point is Prices Paid, which is a snapshot of purchasing managers’ inflation expectations. The economic calendar is pointing to a slide from 82.2 to 80.5 points. However, with rising prices being on everybody’s minds – television sets and gas stations serving as billboards – there is room for an upside swing rather than a downside one.”
How could it affect EUR/USD?
Ahead of the key release, the US dollar jumped back closer to a 20-year high touched in June and dragged the EUR/USD pair back below the 1.0400 round-figure mark. Stronger-than-expected PMI print would be enough to provide an additional boost to the buck.
Conversely, any disappointment is unlikely to derail the Fed’s policy tightening path or impress the USD bears amid concerns about the global economic slowdown. This, in turn, suggests that the path of least resistance for the EUR/USD pair is to the downside.
Eren Sengezer, Editor at FXStreet, offered a brief technical outlook and outlined important levels to trade the major: “The Relative Strength Index (RSI) indicator on the four-hour chart stays below, confirming the view that sellers look to retain control. 1.0470 (Fibonacci 23.6% retracement of the latest downtrend) aligns as initial resistance. As long as this level stays intact, buyers are likely to remain uninterested.”
“Above 1.0470, 1.0500 (psychological level, 100-period SMA) and 1.0520 (Fibonacci 38.2% retracement) could be seen as next technical hurdles,” Eren added further.
• ISM Manufacturing PMI Preview: High inflation component steal the show, boost dollar
• EUR/USD Forecast: Euro remains vulnerable after mixed eurozone inflation data
• EUR/USD Price Analysis: further decline remains on the cards
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).