The EUR/USD currency pair remained stable throughout the European trading session, hovering around 1.1629. Expectations regarding the upcoming release of the United States Institute of Supply Management (ISM) Manufacturing Purchasing Managers’ Index (PMI) data for November loom large, as this information could significantly influence the currency pair’s trajectory. The ISM Manufacturing PMI is scheduled for release today at 15:00 GMT and has the potential to impact market sentiment surrounding the euro and the US dollar.
For the Manufacturing Prices Paid index, analysts predict an increase. They forecast that it will rise to 59.5, an increase from the last reading of 58.0. A doubling of this index would suggest significant inflationary pressure within the manufacturing sector. This typically supports the US dollar and can lead to a bearish EUR/USD forecast.
Current Technical Landscape of EUR/USD
EUR/USD is showing a bullish picture overall, trading above the upsloping 200-day Exponential Moving Average (EMA) at 1.1437. That upward momentum is a good sign of just how strong of a position this pair is in. Anything above continued strength above this level represents bullish bias in the short term. The gentle ascent of the 200-day EMA further supports this nascent uptrend, indicating potential demand in the event of pullbacks.
The currency pair has also recently pierced through a long-term descending trend line that extends from the June high at 1.1770. This smart move represents a big technical step forward. This pause indicates a hopeful increase in the opposite direction. If the duo are able to maintain above that breakout region around 1.1625 it will reinforce that momentum. Strategists warn that a sustained move above this technical resistance could help cement the bullish EUR/USD outlook.
14-day RSI is at 57 indicating strengthening momentum with no immediate overbought conditions. This technical indicator further indicates that the pair still has room for upside. All that is contingent on market conditions remaining favorable.
Implications of ISM Manufacturing PMI Release
The release of the next ISM Manufacturing PMI will be of great interest to market participants. Any figure above 50 indicates the manufacturing sector is expanding. This would be a bullish signal for the US dollar and likely drive the EUR/USD lower. On the other hand, a print under 50 would indicate contraction, putting the index in a potentially more EUR/USD-friendly environment.
This month’s anticipated reading marks the ninth consecutive month that the Manufacturing PMI is expected to come in below 50. A sufficiently long stretch of dollar contraction will depress investor confidence in the dollar. This opens up an opportunity for EUR/USD to continue its upward climb, particularly if it holds above important support.
Market analysts will be looking intensely at survey responses to get a sense of how manufacturing activity has changed relative to last month and other prior months. Overall, the results will probably determine which way traders will be positioned and steer the market in the very short term after the data comes out.
Market Sentiment and Future Outlook
While EUR/USD holds above important technical levels, sentiment in the market continues to be moderately positive. Price pullbacks tend to stimulate strong demand right around the 200-day EMA, as evidenced by recent performance. This adds to the faith on the pair continuing its upward trend.
If the ISM Manufacturing PMI data comes in line with expectations or better than expected, then we might see a stronger US dollar. This change is likely to make the EUR/USD pair much more volatile. Conversely, if the data disappoints, it could indicate further contraction in the manufacturing sector. Under this scenario, the euro would win further ground against the American dollar.