Euro Price, News and Analysis:
- German RKI warns of a rising number of coronavirus patients.
- Euro[1] likely to remain weak as bond yields slide lower.
For all market-moving economic data and events, see the DailyFX Calendar.[2]
Germany is at the beginning of the third wave of coronavirus, the Head of the Robert Koch Institute Lothar Wieler said yesterday, after the number of new covid-19 cases in Germany rose by around 2,500, the largest daily increase in over one month. Germany, and the EU, have been behind the curve on vaccinations due to supply problems, while headline fears over the safety of the AstraZeneca vaccination for over-65s have also weighed on the program. Any further delay in re-opening the German economy will weaken the single-currency further.
The latest ECB policy decision held on Thursday, March 11, saw all monetary settings left untouched, although the central bank said that they would increase the rate of their PEPP bond-buying program in the coming months in an effort to stem the recent uptick in Euro Area bond yields. According to the ECB, ‘the Governing Council will purchase flexibly according to market conditions and with a view to preventing a tightening of financing conditions that is inconsistent with countering the downward impact of the pandemic on the projected path of inflation’.
How Central Banks Impact the Forex Market[3]
The Euro-US Dollar[4] rate is also being impacted by higher government bond yields in the US with the benchmark US 10-year now offering 1.60%, its highest level in over a year. The yield spread differential between the US 10-year note (1.605%) and the German 10-year Bund (-0.315%), the de-facto Euro Zone benchmark, is now 192 basis points, the widest level since February 2020. If this spread widens
