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The ECB’s hesitance to act on yields, the US ISM Manufacturing PMI and stimulus uncertainty may keep the EUR/USD pair down as the euro suffers below the 1.2110 resistance, Yohay Elam, an Analyst at FXStreet, reports. 

Key quotes

“Officials at the European Central Bank expressed concerns about rising bond yields in the old continent, but are they willing to act? Weekly purchase data from the ECB is due out later in the day and it will likely show the bank remains on the sidelines. Higher returns on long-term debt may undermine the old continent’s recovery.”

“The ISM Manufacturing Purchasing Managers’ Index will likely show robust growth in the industrial sector, which has been less affected by the pandemic. The forward-looking survey also serves as a hint toward Friday’s Nonfarm Payrolls and hopes for a pick-up in employment could revive concerns about overheating of the economy. A consequent sell-off in bonds could boost the greenback.”

“President Joe Biden’s $1.9 trillion covid relief package now moves to the Senate, where Democrats have the thinnest of margins. If conservative Democrats such as Joe Manchin III halt pay rises, they could accept other measures and perhaps pass the vast majority of the package. In that case, prospects of robust expenditure would weigh on bonds, boosting yields and the dollar.” 

“Critical resistance awaits at 1.2110, which is the confluence of the 50 and 100 SMAs and also a swing low seen last week. Beyond 1.2110, the next cap to watch is 1.2150, which held EUR/USD down in mid-February.”

“Support awaits at 1.2020, a trough in mid-February. Further down, 1.20 and 1.1950 await the pair.”

 

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