US ISM Services PMI Overview
The Institute of Supply Management (ISM) will release the Non-Manufacturing Purchasing Managers' Index (PMI) - also known as the ISM Services PMI – at 15:00 GMT this Thursday. The gauge is expected to edge higher to 61 in February from 59.9 in the previous month. Given that the Fed looks more at inflation than growth, investors will keep a close eye on the Prices Paid sub-component, which is expected to rise to 83 from 82.3 in January.
How Could it Affect EUR/USD?
The data might do little to revive expectations for a more aggressive policy tightening by the Fed and is likely to be overshadowed by Fed Chair Jerome Powell's testimony. Moreover, the market focus remains glued to geopolitical developments and the situation in Ukraine. This, in turn, suggests that any immediate market reaction is more likely to remain short-lived.
Meanwhile, Eren Sengezer, Editor at FXStreet, offered a brief technical outlook for the pair: “On Wednesday, EUR/USD reversed its direction after touching its lowest level since May 2020 near 1.1060, suggesting that near-term support has formed at that level..”
Eren also outlined important technical levels to trade the major: “In case sellers manage to drag the price below 1.1060, additional losses toward 1.1000 (psychological level) could be witnessed. The Relative Strength Index (RSI) indicator on the four-hour chart stays below 50 and confirms the bearish bias..”
“On the upside, initial resistance is located at 1.1150 (20-period SMA, static level) before 1.1200 (psychological level) and 1.1220 (50-period SMA),” Eren added further.
Key Notes
• EUR/USD Forecast: Euro to face additional selling pressure once 1.1060 fails
• EUR/USD remains offered below the 1.1100 mark, looks to Ukraine, Powell
• EUR/USD to move downward towards the 1.0840 mark – SocGen
About the US ISM Services PMI
The ISM Non-Manufacturing Index released by the Institute for Supply Management (ISM) shows business conditions in the US non-manufacturing sector. It is worth noting that services constitute the largest sector of the US economy and results above 50 should be seen as supportive for the USD.