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Trading the News: U.S. ISM Manufacturing

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.

Image of DailyFX economic calendar

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. 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 previous print

Period

Data Released

Estimate

Actual

Pips Change

(1 Hour post event )

Pips Change

(End of Day post event)

NOV

2018

12/03/2018 15:00:00 GMT

57.5

59.3

+8

+5

November 2018 U.S. ISM Manufacturing

EUR/USD 5-Minute Chart

Image of eurusd 5-minute chart

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 57.4during 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. Review the DailyFX Advanced Guide for Trading the News to learn our 8 step strategy.

EUR/USD Daily Chart

Image of eurusd daily chart
  • 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).

For more in-depth analysis, check out the 1Q 2019 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.