October US S&P Global PMI expected to show a slowdown in business activity

• October is expected to bring a slight slowdown in US business activity, with expansion still firmly intact.
• After September's strong results, both manufacturing and services survey readings are projected to edge lower.
• Stronger-than-forecast business activity could bolster the US Dollar by strengthening expectations for additional Fed rate increases.

October's preliminary United States (US) S&P Global Purchasing Managers Indices (PMIs) are due on Friday. Ahead of next week's Federal Reserve (Fed) monetary policy meeting, the release will offer an updated assessment of the world's largest economy.

Private-sector business activity is tracked through the report's Manufacturing, Services and Composite PMIs. A reading above 50 denotes expansion; one below that level indicates contraction.

Despite persistent inflation pressures and high borrowing costs, recent US data have continued to show resilient economic activity as the October surveys approach. Investors will scrutinise the readings for evidence of weaker growth and renewed price pressures, either of which could affect the Fed's policy outlook and the US Dollar (USD).

October S&P Global PMIs: Modest slowdown expected

55.6 is the forecast for October's S&P Global Manufacturing PMI, down slightly from September's 55.9. The Services PMI is projected to slip from 58.8 to 57.9. Together, the forecasts suggest a moderate easing in US private-sector activity after September's particularly strong results. September's Composite PMI of 58.4 underscored robust expansion across the private sector.

Both sectors are projected to moderate, but their expected readings sit well above the 50 dividing line. This would indicate that the US economy is still growing at a healthy pace.

Persistent inflation pressures add importance to the release. Inflation has exceeded expectations in recent US data, while Retail Sales and labour market measures continue to point to resilient domestic demand.

Following September's 25-basis-point (bps) increase, the Fed is widely expected to keep interest rates steady at its 28 October meeting. Nevertheless, the CME FedWatch tool shows that investors have fully priced in a further increase in December.

October flash US S&P Global PMIs: Release timing and EUR/USD impact

13:45 GMT on Friday is the scheduled release time for October's S&P Global Manufacturing, Services and Composite PMIs. As investors adjust positions ahead of the Fed's 28 October policy decision, the data could prompt volatility in the US Dollar and EUR/USD.

Expectations for more Fed rate increases over the coming months could strengthen if the report beats forecasts. US Treasury yields and the US Dollar would likely benefit, potentially leaving EUR/USD under pressure.

A more pronounced slowdown than forecast, especially in services, could instead fuel doubts about the sustainability of US growth. Disappointing PMI figures could lead investors to reconsider the prospects for further monetary tightening. That could weaken the Greenback and lend support to EUR/USD.

With manufacturing and services both projected to remain firmly in expansion, however, figures close to consensus could produce only a relatively muted market response.

December's additional Fed rate increase is already largely reflected in market pricing. Investors will therefore examine Friday's PMIs for confirmation of US economic resilience or evidence of a slowdown. An upside surprise could strengthen expectations for further tightening. A disappointing release could instead undermine confidence in economic growth and pressure the US Dollar.

On the one-hour chart, the 100-period Simple Moving Average (SMA) at 1.1223 and the 200-period SMA at 1.1213 continue to cap EUR/USD, leaving the outlook modestly bearish. The pair is edging along just above nearby price support. With the Relative Strength Index (14) near 40, bullish momentum appears to be fading rather than conditions becoming outright oversold. Downside risks therefore persist while the pair remains below those averages.

The first downside support is the horizontal level around 1.1190, with further support at 1.1150 and 1.1114. Recovery attempts face immediate resistance at the 200-period SMA of 1.1213, then the 100-period SMA of 1.1223. Beyond those levels, the stronger barriers at 1.1260 and 1.1285 would need to be recaptured to reduce the prevailing bearish bias.

(The technical analysis of this story was written with the help of an AI tool. Know more.)