US ISM Manufacturing PMI Summary.
The Institute for Supply Management (ISM) will release its latest manufacturing business survey result, also known as ISM Manufacturing PMI at 15:00 GMT this Monday. The index is forecast to have declined from the previous month’s reading of 60.5 to 60.0 in January, still pointing to a decent expansion for the eighth consecutive month.
Joseph Trevisani, senior analyst at FXStreet explains: “The business community is preparing for recovery with investment spending and inventory building, convinced that withdrawal from the pandemic will not only allow a return to normalcy, but will encourage an explosion in aid spending.”
How could it affect the EUR / USD?
Ahead of the key release, the U.S. dollar was back in demand amid disagreements over the $ 1.9 trillion Covid aid package proposed by U.S. President Joe Biden and appeared unaffected by a solid rally in equity markets. This, in turn, pushed the EUR / USD pair back below 1.2100, with bears now eyeing the next relevant support near the 1.2055 region.
A stronger than expected reading could be enough to provide additional boost to the USD and drag the pair further below the mentioned support, challenging the key psychological level of 1.2000. On the contrary, the market reaction to any disappointment is more likely to remain limited and not provide a significant boost to the EUR / USD pair.
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 situation in the US A result above 50 is considered positive (or bullish) for the USD, while a result below 50 is considered negative (or bearish).
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