TheNews

Trading the News: U.S. ISM Non-Manufacturing

A rebound in the U.S ISM Non-Manufacturing survey may fuel the near-term strength in the greenback and spark a selloff in EUR/USD should the report boost expectations for a 2016 Fed rate-hike.

Why Is This Event Important:

It seems as the Federal Open Market Committee (FOMC) is taking a similar path to 2015 as a growing number of officials endorse higher borrowing-costs, and the central bank may continue to take a more collective approach to prepare U.S. households and businesses for a December rate-hike as ‘the Committee judges that the case for an increase in the federal funds rate has strengthened.’ However, market participants may pay increased attention to the 2017-rotation as the three dissenting members from the September interest-rate decision (Esther George, Loretta Mester, and Eric Rosengren) give up their votes, and the decline in the long-run forecast for the federal funds rate may become a key theme in the year ahead as Chair Janet Yellen continues to endorse a ‘gradual’ path in normalizing monetary policy.

How To Trade This Event Risk

Bullish USD Trade: ISM Non-Manufacturing Survey Rebounds to 53.0 or Higher

• Need red, five-minute candle following the print to consider a short position on EUR/USD.
• If market reaction favors a bullish dollar trade, sell EUR/USD with two separate position.
• Set stop at the near-by swing high/reasonable distance from entry; look for at least 1:1 risk-to-reward.
• Move stop to entry on remaining position once initial target is hit; set reasonable limit.

Bearish USD Trade: Gauge for U.S. Service-Based Activity Disappoints

• Need green, five-minute candle to favor a long EUR/USD trade.
• Implement same setup as the bullish dollar trade, just in reverse.

Potential Price Targets For The Release
EUR/USD Daily



Broader outlook for EUR/USD remains tilted to the upside as price & the Relative Strength Index (RSI) preserve the bullish formations from earlier this year, but the pair may face a narrowing range going through the first full-week of October as it remains stuck within the wedge/triangle formation carried over from the summer months.

• Interim Resistance: 1.1420 (23.6% retracement) to 1.1428 (June high)
• Interim Support: 1.0912 (June low) to 1.0940 (61.8% retracement)

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