When are the S&P Global's flash US PMIs and how could the data affect EUR/USD?

US PMI Overview

S&P Global will release the flash version of the US Manufacturing and Services PMIs at 13:45 GMT this Friday. The gauge for the manufacturing sector is expected to remain in contraction territory for the seventh straight month and edge lower to 49 in April from 49.2 in the previous month. The Services PMI, meanwhile, is anticipated to show a slight deceleration in growth and come in at 51.5 for the current month, down from March's final reading of 52.6. Furthermore, the composite PMI is expected to show a rise in overall business activity and rise to 52.8 from 52.3 previously.

How Could It Affect EUR/USD?

Heading into the key release, the US Dollar (USD) struggles to gain any meaningful traction amid a softer tone surrounding the US Treasury bond yields. This, in turn, assists the EUR/USD pair to edge higher for the second successive day on Friday. That said, the prospects for further policy tightening by the Federal Reserve (Fed) act as a tailwind for the buck and should keep a lid on any meaningful upside for the major. A stronger US PMI print will reaffirm expectations that the US central bank might continue raising interest rates and lend support to the Greenback.

Conversely, weaker US macro data will add to worried about economic headwinds stemming from rising borrowing costs and lift bets for an imminent pause in the Fed's rate-hiking cycle. This, in turn, could lead to a further decline in the US Treasury bond yields and prompt fresh selling around the buck. Apart from this, expectations for additional rate hikes by the European Central Bank (ECB) in the coming months could underpin the shared currency, suggesting that the path of least resistance for the EUR/USD pair is to the upside.

Eren Sengezer, European Session Lead Analyst at FXStreet, offers a brief technical outlook for the major and writes: “EUR/USD failed to return within the ascending regression channel and the Relative Strength Index (RSI) indicator on the four-hour chart dropped below 50, pointing to a bearish tilt in the short-term outlook.”

Eren also outlines important technical levels to trade the EUR/USD pair: “On the downside, the 100-period Simple Moving Average aligns as key support at 1.0930. EUR/USD is yet to make a four-hour close below that level since the beginning of the latest uptrend in mid-March. 1.0900 (psychological level, static level), 1.0870 (Fibonacci 38.2% retracement of the latest downtrend) and 1.0825 (200-period SMA) could be seen as next bearish targets if 1.0930 fails. ”

“The lower limit of the ascending channel continues to act as key resistance at 1.0970 before 1.1000 (psychological level, static level) and 1.1030 (mid-point of the ascending channel),” Eren adds further.

Key Notes

  •  EUR/USD Forecast: Euro could weaken further once below 1.0930

  •  EUR/USD faces further consolidation near term – UOB

  •  EUR/USD Analysis: Remains confined in a range below 1.1000 ahead of Eurozone/US PMIs

About the US Manufacturing PMI

The Manufacturing Purchasing Managers Index (PMI) released by S&P Global captures business conditions in the manufacturing sector. As the manufacturing sector dominates a large part of total GDP, the manufacturing PMI is an important indicator of business conditions and the overall economic condition in the United States. Readings above 50 imply the economy is expanding, making investors understood it as a bullish for the USD, whereas a result below 50 points for an economic contraction, and weighs negatively on the currency.

About the US ISM Services PMI

The Services Purchasing Managers Index (PMI) released by S&P Global captures business conditions in the services sector. As the services sector dominates a large part of total GDP, the services PMI is an important indicator of the overall economic condition in US. A result above 50 signals is bullish for the USD, whereas a result below 50 is seen as bearish.