S&P Global’s flash US Composite PMI rose to 52 in April, up from 50.3 in March. The report said business activity growth picked up after near-stagnation in March.
Manufacturing output increased to 54 from 52.3, beating the 52.5 forecast. The Services PMI moved up to 51.3 from 49.8, above the 50.0 forecast.
Ahead of the release, estimates had put Manufacturing PMI at 52.5 versus 52.3 and Services PMI at 50.0 versus 49.8. A reading below 50.0 is classed as contraction in business activity.
EUR/USD was down 0.2% near 1.1680 before the data. It traded above the 38.2% Fibonacci level at 1.1666 and below the 20-period EMA at 1.1689, with RSI at 50.2.
Resistance levels were listed at 1.1689, 1.1745, 1.1825, 1.1938 and 1.2082. Support levels were listed at 1.1666, 1.1567 and 1.1408.
The Composite PMI is a monthly survey-based index spanning manufacturing and services, ranging from 0 to 100. Readings at 50.0 indicate no change, above 50 expansion, and below 50 decline.
This stronger-than-expected business activity suggests the US economy is more resilient than we thought, especially after the slowdown in March. The Composite PMI coming in at 52 shows a solid rebound, calming fears of a sharp downturn that followed the Middle East conflict. This indicates underlying strength that we need to factor into our strategies for the next few weeks.
With the economy showing this kind of momentum, the Federal Reserve has less reason to consider cutting interest rates anytime soon. We’ve seen March’s Consumer Price Index (CPI) data holding firm around 2.9%, still well above the Fed’s target, and this robust PMI report will only strengthen their resolve to wait. Any bets on a summer rate cut should now be seen as increasingly unlikely.
For our foreign exchange desks, this data is a clear bullish signal for the US Dollar. A less dovish Fed will likely push the dollar higher against currencies like the Euro and the Yen, whose central banks are on a different path. We should anticipate the EUR/USD pair, currently near 1.0750, to test lower support levels in the coming sessions.
This unexpected strength will likely increase market volatility as traders recalibrate their expectations for Fed policy. Implied volatility on options for indices like the S&P 500 and currency pairs may rise from the current low levels we’ve seen recently. This environment could be favorable for strategies that profit from price swings, regardless of direction.
The particularly strong jump in the Manufacturing PMI to 54 is a key detail we should not overlook. This points to renewed strength in the industrial sector, which has been lagging. We should consider bullish positions on industrial sector ETFs or options on major manufacturing companies that stand to benefit from this expansion.
Looking back, this situation feels similar to periods in 2025 when strong economic data repeatedly delayed expected rate cuts and fueled a multi-month rally in the dollar. The final PMI readings for 2025 consistently stayed above 50, showing a resilience that the market often underestimated. We should be prepared for a similar pattern to emerge now.
