When is the US ISM Services PMI and how could it affect EUR/USD? – by hareshmenghani EURUSD UnitedStates EconomicIndicator Fed Currencies
14:00 GMT this Monday. The gauge is expected to come in at 51.5 for May, down a little from 51.9 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 anticipated to fall from 59.6 in April to 57.8 during the reported month.
In contrast, any immediate market reaction to the disappointing headline print is more likely to remain limited amid a further rise in the US Treasury bond yields. This, in turn, favours the USD bulls and suggests that the path of least resistance for the EUR/USD pair is to the downside. That said, a generally positive risk tone could act as a headwind for the safe-haven buck and help limit deeper losses for the major, at least for the time being.
Eren Sengezer, Editor at FXStreet, offers a brief technical outlook and writes: “EUR/USD broke below the 20 and the 50-period Simple Moving Averages on the four-hour chart and the Relative Strength Index indicator on the same chart dropped below 50, reflecting the bearish bias in the short term. Eren also outlines important technical levels to trade the EUR/USD pair: “The upper-limit of the descending regression channel aligns as immediate support at 1.0680. In case EUR/USD returns within that channel by confirming that level as resistance, 1.0650 aligns as strong support before bears could target 1.0600 .”
“On the upside, a four-hour close above 1.0720 could discourage sellers. In that scenario, 1.0750 and 1.0780 align as next hurdles,” Eren adds further.
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