When is the US ISM Services PMI and how could it affect EUR/USD?

US ISM Non-Manufacturing 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 Wednesday. The gauge is expected to have eased further to 56.8 in January from the previous month's reading of 57.7. The New Orders Index is also projected to fall to 55.5 from 58.6. Conversely, the employment sub-component is expected to have edged higher to 49.7 from 48.7 in December.

How could it affect EUR/USD?

Ahead of the key release, a broad-based US dollar strength dragged the EUR/USD pair to fresh two-month lows, around the key 1.2000 psychological mark. Expectations for a massive US fiscal stimulus continued pushing the US Treasury bond yields higher, which, in turn, underpinned the USD. A stronger-than-expected data might be enough to provide an additional boost to the greenback and exert some additional pressure on the major.

Meanwhile, any immediate market reaction is more likely to remain short-lived and do little to provide any meaningful boost to the pair. Concerns that a delay in the rollout of COVID-19 vaccine in Europe could hamper economic recovery might continue to weigh on the shared currency and keep a lid on any attempted recovery.

In the meantime, Yohay Elam, FXStreet's own analyst outlined important technical levels for the EUR/USD pair: “Support awaits at the new 2021 low of 1.2010, followed by 1.1960, 1.1930 and 1.1890, which were all in play in late 2020. Above 1.2050, the next resistance lines to watch are 1.2090, 1.2130 and 1.2190.”

Key Notes

  •  Purchasing Managers' Index January Services Preview: No reason to pull back now

  •  EUR/USD Forecast: Euro set to extend falls after the breakdown, US stimulus becomes dollar booster

  •  EUR/USD remains offered near 1.2000, looks to US yields, data

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 result above 50 should be seen as supportive for the USD.