EUR/USD Price Bids Above 1.12 as Yields Drop, Eying Lagarde

• The EUR/USD prints modest gains but struggles to attract bulls around 16-month lows.
• Virus-related deaths in Germany surpass the 100,000 mark amid fears of infection spreading.
• Covid resurgence dwindles Fed rate hike odds as DXY tracks yield south.

Before Friday’s European session, the EUR/USD price bounces off its most bullish daily performance. Despite the Covid crisis in Europe, the major currency pair hovers around 1.1223, up 0.12% for the day.

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Over 100,000 people have died as a result of the outbreak of Coronavirus in Germany. According to the Robert Koch Institute for Infectious Diseases, another 351 people have died of the coronavirus, bringing the total to 100,119 since the start of the pandemic. In addition, there are now 75,961 new cases of the disease reported each day, a new record. Likewise, Austria has already announced local bans following the virus outbreak. Still, Reuters reported that the French Minister of Health Olivier Veran said the country would not announce any new bans or curfews following the outbreak.

An international meeting of the World Health Organization (WHO) has been convened to discuss the new version of the virus and any concerns it may have to verify its status as a “worrying option.” As the virus, officially called B.1.1.529, is immune to vaccines, the South African version of the virus is becoming ever louder.

Continuing Wednesday’s decline from a monthly high, the 10-year US Treasury yield fell eight basis points (bps) to 1.565%, while S&P 500 futures fell 1.0%. In addition, the US dollar index (DXY) fell by 0.08 percent to 96.70.

The virus problem is hurting returns and restraining rate hikes. However, ECB politicians aren’t bulls either, as they recently tested the EUR/USD bulls again.

According to the minutes of the most recent European Central Bank (ECB) meeting, the board of directors largely agreed that inflation will subside next year, regardless of how long the supply problems persist. Philip Lane, the chief economist, said he expects the inflation rate to fall below the target in the medium term.

ECB head Christine Lagarde and politician Fabio Panetta will propose an intermediate course to get a clear direction, but they will focus on Covid and Yield updates.

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EUR/USD price technical analysis: Well-bid above 1.1200

The EUR/USD price remains well supported above the 1.1200 level. However, the 20-period SMA on the 4-hour chart continues to resist further gains. Finding acceptance above the level may trigger further buying and test 1.1250 ahead of 1.1300. On the downside, breaking the 1.1200 level may result in deeper retracement towards the 1.1100 area.

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