Draghi comments on buying bonds with negative yields
The ECB deposit rate is -0.20% and that will now act as a magnet for bond yields.
Draghi said the central bank won't buy any bonds with a yield lower than that but under the structure of ECB QE, it doesn't mean they'll buy any less German debt, for instance. Instead, they'll be forced further out the curve so the market is seeing it as bullish for the long end (ie lower yields).
Lower core long-term debt yields make the euro even less attractive against the US dollar and that's why EUR/USD is testing 1.10.
On the deposit rate, the ECB has said it's at the lower bound but there's also the risk they could break that promise and lower it further.
Coming into the decision, there was speculation the ECB would refrain from buying bonds with negative yields, which is monetary financing in a sense.
