Waning ISM Manufacturing Survey To Fuel EUR/USD Rebound

Fresh updates to the ISM Manufacturing survey may fuel a larger rebound in EUR/USD as the index is expected to narrow to 57.8 from 59.3 in November.

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Signs of waning business confidence may drag on the U.S. dollar as it curbs bets for an imminent Federal Reserve rate-hike, and the central bank may largely endorse a wait-and-see approach at its next interest rate decision on January 30 as officials ‘see growth moderating ahead.’

As a result, a marked downtick in the ISM Manufacturing survey may produce headwinds for the U.S. dollar as it dampens the outlook for growth and inflation, but another unexpected improvement in business sentiment may foster a bullish reaction in the greenback as it puts pressure on the FOMC to further embark on its hiking-cycle.

IMPACT THAT THE ISM MANUFACTURING SURVEY HAS HAD ON EUR/USD DURING THE PREVIOUS PRINT


EUR/USD 5-Minute ChartNovember 2018 U.S. ISM Manufacturing

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The ISM Manufacturing survey unexpectedly improved in November, with the index climbing to 59.3 from 57.7 in October. A deeper look at the report showed the employment component also advancing to 58.4 from 56.8, with the gauge for New Orders increasing to 62.1 from 57.4 during the same period.

EUR/USD quickly bounced back from the 1.1335 region despite the better-than-expected ISM print, with the exchange rate holding steady throughout the remainder of the session to close the day at 1.1352.

EUR/USD DAILY CHART

(Click on image to enlarge)

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  • Near-term outlook for EUR/USD remains uneventful as it marks another failed attempt to test the November-high (1.1500), and the exchange rate may continue to carve a series of lower highs & lows especially as the Relative Strength Index (RSI) snaps the upward trend carried over from November.
  • Need a break/close below 1.1290 (61.8% expansion) to open up the near-term support zone around 1.1220 (78.6% retracement), which coincides with the yearly-low (1.1216), with the next downside region of interest coming in around 1.1140 (78.6% expansion).

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