US ISM non-manufacturing preview: What to expect of EUR/USD?

US ISM non-manufacturing (services) PMI is seen ticking higher to 54.1 in March from February figure of 53.4.

EUR/USD is heading into the data release on a weak footing, although JPY rally has stalled, helping EUR/JPY recover from lows. That has also helped EUR/USD recover from the daily low of 1.1344 to trade around 1.1370 levels.

Strong data to help USD

A better-than-expected ISM services figure would give USD bulls a shot in the arm, especially given the backdrop of hawkish Fed talk (Rosengren and Evans). However, the data release has lost its shine this time as non-farm payrolls was released last Friday, thus traders may not look into ISM non-manufacturing employment sub index.

It is worth noting, the markets are still unconvinced about the possibility of the Fed rate hike despite Friday’s strong payrolls and wage growth figures. Hence, a weaker-than-expected/in line with estimates figure could weaken USD/leave USD unaffected.

Moreover, the data may not receive any attention at all if the risk aversion worsens in the US session.

EUR/USD Technical Levels

The immediate hurdle is noted at 1.1405 (daily high), above which a relook at 1.1438 (Apr 1 high) appears likely. Acceptance above the same would expose 1.1460 (Sep 18 high). On the other hand, a break below 1.1342 (Mar 17 high) would open doors for a drop to 1.1287 (hourly 200-MA), under which prices could descend to 1.1257 (61.8% of 1.1714-1.0517).