ISM Manufacturing PMI Preview: What to Expect of EUR/USD?
The Institute for Supply Management (ISM) will release its preliminary gauge of manufacturing activity in the US at 14:00 GMT.
Market consensus calls for a modest decline in the ISM manufacturing PMI, from 50.8 in April to 50.40 in May, although above the 50.0 threshold that separates expansion from contraction in the manufacturing activity.
A disappointing reading will likely weigh on the dollar, as investors continue to assess the health of US economy when evaluating the possibility of another rate hike by the Fed this summer. However, the impact should be quite limited ahead of the more important nonfarm payrolls report due on Friday.
EUR/USD levels to watch
Ahead of the release, EUR/USD was trading at 1.1180, up 0.5% on the day. A below-expectations reading will be dollar negative and could see the pair climbing towards 1.1200 (May 27 high/psychological level) and 1.1242 (May 23 high) en-route to 1.1260 (20-day SMA).
On the other hand, a stronger-than-expected reading will be dollar positive, sending EUR/USD to the 1.1100/1.1097 zone (200-day SMA/May 30 low) which stands as immediate support, followed by 1.1057 (Mar 16 low) and 1.1024 (Mar 7 low).