Falling yields globally has also raised concerns that policymakers, especially the European Central Bank, may have limited firepower in boosting economic growth, a factor that has weighed on the single currency.

"We have seen little evidence that unconventional tools can stimulate or sustain economic growth," said David Lafferty, chief market strategist at Natixis Investment Managers.

"The global recovery and expansion has been historically long but has also been historically weak."

Germany's 10-year Bund yield breached the European Central Bank's deposit rate of -0.40pc, a level analysts say acts as a psychological barrier even though shorter-dated German bond yields already trade well below it.

But despite the fall in yields -- German bond yields have dropped 65 bps this year -- the single currency has been well supported at around $1.12, a level it has traded above since early June and 1.5pc above a 2019 low of $1.1055 hit in late May.

Analysts say the euro's surprising strength is due to concerns that any stimulus from the ECB after years of negative policy rates and multiple rounds of bond purchases may be dwarfed by likely big rate cuts from the Fed.

"More easing from the next ECB chief is already priced into bond markets and it will take a significant surprise for the euro to move from current levels," said Ricardo Evangelista, a senior analyst at brokerage ActivTrades.

On Friday, the single currency edged 0.2pc lower at $1.1265 and is on track for a weekly loss of 0.9pc versus the dollar, its biggest weekly loss since mid-June.