USD weakens as ISM Services PMI falls to 50.1, missing 51.5 forecast
The US dollar declined broadly following disappointing ISM Non-Manufacturing PMI data for July, which came in at 50.1 versus the 51.5 estimate, barely above the contraction threshold. EUR/USD gained 0.2% to 1.0920, while GBP/USD rose to 1.2845. The services sector showed widespread weakness with 7 of 10 components declining, including concerning drops in Employment (46.4, -0.8) and New Orders (50.3, -1.0). However, Prices surged to 69.9 (+2.4), indicating persistent inflationary pressures. The weak services data, combined with deteriorating employment conditions, strengthens the case for Federal Reserve rate cuts in September. Technical indicators suggest USD/JPY could test support at 149.50, while EUR/USD faces resistance at 1.0950. Traders should monitor upcoming US employment data for confirmation of economic softening, which could accelerate dollar weakness across major pairs.
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