The United States (US) Institute of Supply Management (ISM) Manufacturing Purchasing Managers’ Index (PMI) data for January is scheduled to be published today at 15:00 GMT.

The ISM is expected to show that the manufacturing sector activity has started the year on a weak note. Economists expect the manufacturing output to have contracted again, but at a moderate pace. The Manufacturing PMI is seen at 48.3, higher than 47.9 in December. A figure below 50.0 is considered a contraction in the business activity.

Apart from the Manufacturing PMI, investors will also focus on sub-components of data, such as the Employment Index, New Orders Index, and Prices Paid.

Weaker-than-projected US ISM Manufacturing PMI data would prompt expectations for interest rate cuts by the Federal Reserve (Fed), as policymakers have remained concerned over the economic outlook. However, better figures would be a relief for Fed officials, but will unlikely act as a major drag on Fed dovish expectations.

How could US ISM Manufacturing PMI affect EUR/USD?

EUR/USD trades marginally higher to near 1.1865 at the press time. The major currency pair holds above the 20-day Exponential Moving Average (EMA), signifying that the upside trend remains intact.

The 14-day Relative Strength Index (RSI) cools down to 57.30 from overbought levels near 80.00, hinting at a possible return of bulls, with the momentum oscillator remaining above the midline of 50.00 (neutral).

On the upside, the January high of 1.2082 will remain a key barrier for the bulls. Looking down, the 20-day EMA will act as a major support zone.