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EUR/USD binary signal - U.S. ISM non-manufacturing PMI - 05 June 2017

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20:00 GMT
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The U.S. institute of supply management (ISM) will be releasing the monthly services PMI numbers for the month of May. The data is expected to come out at 1400 GMT today. Economists polled are forecasting a headline drop in the index from 57.5 in April to 57.3 in May.

The decline in the services PMI is expected amid what could be a possible temporary slowdown in the U.S. services sector. The weak data follows last week's manufacturing PMI which showed that activity in the manufacturing sector remained broadly flat.

Despite a dip, the services PMI is no doubt still above the 50-index which denotes an expansion in the services sector of the economy. In April, the ISM non-manufacturing PMI rose for the 88th consecutive month.

The U.S. dollar is likely to remain weak with the onslaught of weak economic indicators. Last week, the nonfarm payrolls showed that the U.S. economy added just 134k jobs in May. This was highly disappointing as the forecasts pointed to a 184k headline print. The fact that the U.S. unemployment rate fell to 4.3% was overshadowed by the weak payrolls and wages which remained stagnant, rising 2.5%.

The weak set of economic indicators is likely to soften the Fed's stand on interest rates. Although the June rate hike is still expected, the pace of rate hikes could begin to slow. In this aspect, today's ISM non-manufacturing PMI is likely to influence the sentiment even further.

What this means for EURUSD, which our recommended binary options signal is a potential continuation to the upside with the euro expected to stay firm heading into the ECB's meeting this Thursday.

Given the above, we expect to see some downside in the EURUSD as price action will pull back from Friday's highs to test the recently broken resistance level of 1.1236 being tested for support. Therefore, we would buy daily PUT options at 1.1275 for a 20:00 GMT expiry time for the EURUSD today.

Disclaimer: The article is written for informative purposes only and it is not financial advice. The author does not have any position in the currency pairs mentioned, and no plans to initiate a position. He wrote the article himself and expressed his own opinions. Readers should not treat any opinion expressed by the author as a specific inducement to make a particular trade or follow a particular strategy, but only as an expression of his opinion. All risks and coasts associated with online trading are your responsibility.