EUR/USD: Four reasons for a bounce at the critical 1.2110 confluence level

EUR/USD has been tumbling from the highs as the US bond rout boosts the dollar. Nonetheless, there are four reasons for a bounce at the critical 1.2110 confluence point, according to FXStreet’s Analyst Yohay Elam. 

Key quotes

“President Joe Biden's proposed $1.9 trillion stimulus plan hit a snag. Elizabeth MacDonough, the Senate parliamentarian, disqualified the hike in the minimum wage from the bill. While House Speaker Nancy Pelosi is set to push the legislation forward, it is in a bind in the upper chamber. Prospects of a delay in further aid to the economy soothe concerns about the economy overheating.” 

“The publication of the Core Personal Consumption Expenditure (Core PCE) figure is likely to show that price rises remain tame.” 

“The third factor that may play in favor of bonds – thus against higher yields and the dollar – is end-of-month flows. Money managers are set to adjust their portfolios in order to tidy up their reports, and that may balance the recent moves.” 

“Powell may hint in another public appearance next week that the current $120 billion/month pace is not a ceiling and that would help. At the moment, the sell-off in bonds and stocks may be seen as a correction rather than a change of course.”

“Support below 1.2110 awaits at 1.2080, 1.2055, 1.2025 and 1.20. Some short-term resistance awaits at 1.2150, a peak recorded earlier in February. It is followed by 1.2183, the daily high, and by 1.2220 and 1.2145.”