Never miss a story from David Song

Subscribe to receive daily updates on publications
Please enter valid First Name
Please fill out this field.
Please enter valid Last Name
Please fill out this field.
Please enter valid email
Please fill out this field.
Please select a country

I’d like to receive information from DailyFX and IG about trading opportunities and their products and services via email.

Please fill out this field.

Your Forecast Is Headed to Your Inbox

But don't just read our analysis - put it to the rest. Your forecast comes with a free demo account from our provider, IG, so you can try out trading with zero risk.

Your demo is preloaded with £10,000 virtual funds, which you can use to trade over 10,000 live global markets.

We'll email you login details shortly.

Learn More about Your Demo

You are subscribed to David Song

You can manage your subscriptions by following the link in the footer of each email you will receive

An error occurred submitting your form.
Please try again later.

Trading the News: U.S. ISM Manufacturing

Updates to the ISM Manufacturing survey may curb the recent selloff in EUR/USD as the index is expected to narrow to 57.6 from 58.1 in July.

Image of DailyFX economic calendar

Another downtick in business sentiment may drag on the U.S. dollar as it dampens the outlook for growth and inflation, and a dismal development may cast doubts for four rate-hikes in 2018 as the Federal Open Market Committee (FOMC) shows little to no interest in extending the hiking-cycle.

In turn, the FOMC may deliver a dovish rate-hike at the next interest rate decision on September 26, and Chairman Jerome Powell & Co. may continue to project a neutral Fed Funds rate of 2.75% to 3.00% as officials see a limited risk for above-target inflation.

However, an above-forecast ISM print may trigger a bullish reaction in the dollar as it puts pressure on the Fed to adopt a more aggressive approach in normalizing monetary policy. Sign up and join DailyFX Currency Analyst David Song LIVE for an opportunity to discuss potential trade setups.

Impact that the ISM Manufacturing survey has had on EUR/USD during the last print


Data Released



Pips Change

(1 Hour post event )

Pips Change

(End of Day post event)



08/01/2018 14:00:00 GMT





July 2018 ISM Manufacturing

EUR/USD 5-Minute Chart

Image of eurusd 5-minute chart

The ISM Manufacturing survey narrowed more-than-expected in July, with the index slipping to 58.1 from 60.2 the month prior. A deeper look at the report showed the gauge for Prices Paid also falling to 73.2 from 76.8 in June, while the Employment component advanced to 56.0 from 56.5 during the same period.

The market reaction to the mixed data prints was short-lived, with EUR/USD largely consolidating throughout the day to close at 1.1659. Review the DailyFX Advanced Guide for Trading the News to learn our 8 step strategy.

EUR/USD Daily Chart

Image of eurusd daily chart
  • There appears to be a broader shift in EUR/USD behavior as both price and the Relative Strength Index (RSI) break out the bearish trends from earlier this year, but the rebound from the 2018-low (1.1301) may continue to unravel as it fails to produce a test of the July-high (1.1791).
  • Lack of momentum to hold above the 1.1640 (23.6% expansion) to 1.1680 (50% retracement) region brings the 1.1510 (38.2% expansion) area back on the radar, with the next downside region of interest coming in around 1.1390 (61.8% retracement) to 1.1400 (50% expansion).

For more in-depth analysis, check out the Q3 Forecast for EUR/USD

Additional Trading Resources

New to the currency market? Want a better understanding of the different approaches for trading? Start by downloading and reviewing the DailyFX Beginners Guide!

Are you looking to improve your trading approach? Review the ‘Traits of a Successful Trader series on how to effectively use leverage along with other best practices that any trader can follow.

--- Written by David Song, Currency Analyst

Follow me on Twitter at @DavidJSong.