The intense flight to safety today is weighing heavily on risk-sensitive currencies such as the Euro and global stock indexes which is allowing the US dollar to rack up even more gains despite falling Treasury bond yields.
A new coronavirus variant which has been detected in South Africa and other African countries is showing signs of rendering the current vaccines useless which have forced countries such as the UK, to ban all flights from countries where the new virus exists and some countries in the European Union are bound to follow suite.
This is devasting news for the Euro and indeed the Eurozone as a whole which is currently grappling with the delta variant of covid 19 and should this new variant from Africa reach European shores it will be hard to see how they will cope.
On a good note, economic data released earlier today show that German Import Prices surprised to the upside in October, rising 3.8% MoM against analysts’ expectations for a figure of 2.1% while the yearly figure hit the market at 21.7% against consensus for a figure of 19.6%.
Looking ahead today, the main drivers of the EUR/USD currency pair will be a monetary speech from European Central Bank head Christine Lagarde which will be followed by another speech by ECB board member Fabio Panetta.
For now, the Euro seems to have found solid support at the $1.1200 level and has bounced solidly off this mark as we enter the European trading session to trade at around 1.1273.
This is probably some type of relief rally considering the loses the currency has racked up over the past week and the next resistance level of $1.1292 will likely see selling pressure reemerge.