Overview of the US ISM non-manufacturing PMI
The Institute of Supply Management (ISM) will release the Non-Manufacturing Purchasing Managers (PMI) Index – also known as the ISM Services PMI – at 2:00 p.m. GMT on Tuesday. The gauge should have increased slightly to 63.5 in June from 64 previously. Conversely, the employment sub-component is expected to rise to 57 in the month reported, from 55.3 in May. However, the focus will be on the prices paid sub-component, which represents inflation and is expected to decline to 79.3 in June from 80.6 previously.
How could this affect the EUR / USD?
Ahead of key data, EUR / USD has seen a reversal from around the 1.1900 mark and has moved well within striking distance of the multi-month lows hit on Friday. A fall in the German ZEW Economic Sentiment Index was seen as a key factor weighing on the common currency. A stronger report could give the US dollar a slight boost and put additional pressure on the major.
Meanwhile, investors now appear convinced that the Fed will wait longer before cutting back on asset purchases or raising interest rates could cap the greenback’s gains. A lower reading will reaffirm market expectations and act as a headwind for the greenback. This, in turn, should extend some support to the major and help limit larger losses, suggesting that market reaction to the report is more likely to be limited.
Meanwhile, Valeria Bednarik, chief analyst at FXStreet, offered a brief technical perspective: “EUR / USD is in a neutral to bearish position. The 4-hour chart shows that the pair is comfortable below a directionless SMA of 20, while the longer ones extend their declines above. Technical indicators are flat with Momentum around its midline and RSI at negative levels, anticipating further decline on a break below 1.1800. “
• Insight into the ISM services PMI: why the inflation component could trigger a rebound in the dollar
• EUR / USD forecasts: pressure is mounting, ready to challenge 1.1800
• EUR / USD price analysis: another visit to 1.1800 remains on the cards
About the US ISM Services PMI
The ISM non-manufacturing index published by the Institute for Supply Management (ISM) shows economic conditions in the US non-manufacturing sector. It should be noted that services are the largest sector of the US economy and that a result above 50 should be considered favorable to the dollar.