US Manufacturing PMI

PMI is a leading indicator of economic health. Above 50.0 indicates expansion in the manufacturing sector, while below 50.0 indicates contraction. PMI influences Fed monetary policy and shows overall strength of the US economy. US manufacturing sector has maintained a steady, yet modest, expansion.

• Previous reading was 51.6, slightly outperforming the forecast of 51.2.
• Upcoming release - market expects the index to remain stable near the 51.6 level.

Trading Scenario

If Bullish

If the Manufacturing PMI exceeds expectations (e.g., 52.5 or higher), it signals robust industrial health and potential inflationary pressure.

• USD Index (DXY): The Dollar is likely to strengthen as high PMI figures reduce the probability of aggressive interest rate cuts by the Federal Reserve. Resistance levels to watch are 101.40 and 102.10.
• EURUSD: The pair will likely face downward pressure due to a stronger Greenback. A break below the 1.1525 support level could open the path toward 1.1450.

If Bearish

If the PMI misses the forecast or dips toward the 50.0 threshold (e.g., 50.5 or lower), it suggests a cooling economy and softens the Fed's hawkish stance.

• USD Index (DXY): The Dollar may weaken as traders price in a more cautious economic outlook. The Index could test support at 98.30 and potentially slide toward 97.70.
• EURUSD: This scenario would provide a tailwind for the Euro. If the pair maintains its footing above 1.1560, it could rally toward the 1.1650 resistance zone and potentially test 1.1700.