It is difficult to pin down what is exactly priced for today’s ECB meeting. Rate cuts and ABS purchases aside (the impact of which is too small to matter), we think markets expect Draghi to signal that large-scale QE has become an even probability by the end of the year. Our expectation is that he delivers – but this notwithstanding, we see four factors that have changed versus H1 that suggest the outlook for the euro remains bearish independent of an ECB-induced squeeze.
Read the full report: FX Daily