The EUR has been capped, mainly on the back of ECB members’ supporting the notion of more aggressive policy action to become more likely as soon as at next month’s central bank meeting.
In that respect it must be noted that ECB Governing council member Nowotny said that multiple measures may be considered as a ref rate cut alone may prove insufficient. According to ECB Vice President Constancio they are looking into what is happening to the FX rate.
All of the above suggests that the ECB remains closely focused on finding appropriate measures in order to keep the EUR from appreciating further.
However, as any policy action next month will to some extend depend on the EUR level itself; it appears unlikely that selling interest is rising considerably around these levels.
This is especially true as a more positive capital flow situation is likely to keep currency downside limited.
Credit Agricole