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ISM Manufacturing PMI preview: What to expect of EUR/USD?

FXStreet (Córdoba) - The Institute for Supply Management (ISM) will publish its manufacturing index for the United States today, which measures business conditions in the sector.

The ISM manufacturing number is expected to rebound modestly in November, to 50.3 from 50.1 the previous month. A reading above the 50.0 level indicates expansion in the sector and even though the index has remained above the threshold since 2012, it has declined every month since June and now stands at its lowest level since May 2013, reflecting that the manufacturing activity remains a weak spot for the economy.

A disappointing reading will likely weigh on the dollar, allowing an EUR/USD steeper recovery. However, at this point not even an awful reading seem enough to persuade investors that the Fed remains on track to raise rates unless employment figures worsen significantly.

On the other hand, a strong ISM PMI reading might have a more ephemeral effect on the US dollar, triggering a rally but investors might want to wait for the nonfarm payrolls report before taking big positions.

EUR/USD levels to watch

As for technical levels, on the upside, next resistances are seen at 1.0632/37 (10-day SMA/Nov 27 high), 1.0700 (psychological level) and 1.0762 (Nov 19 high). On the other hand, if EUR/USD breaks below 1.0557 (7-month low Nov 30), next supports are seen at 1.0520 (Apr 13 low), 1.0500 (psychological level) and 1.0462 (2015 low Mar 13).

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