The European Central Bank clarified its hawkish tilt and basically told us there was no hawkish tilt whatsoever. This weighs on the euro. What’s next? Here are two opinions:

Here is their view, courtesy of eFXnews:

EUR: What’s The Risk Of A N-Term Positioning Squeeze? – SocGen

Societe Generale FX Strategy Research notes the risk of EUR positioning Squeeze has been reduced as of late on the back that the FX market doesn’t currently have a significant EUR long position that can be flushed, but it just has a small EUR short position. 

On the monetary policy front, SocGen argues that If the ECB is trying to anchor bond yields, then the real driver of EUR/USD for a while will be what happens to US yields.

“The 2.3-2.65% range looks pretty strong and dooms EUR/USD to its current 1.04-1.09 range. That’ll change if the ECB’s view of the world changes after the French elections (which i suspect it will) and there’s a greater tolerance of higher Bund yields in particular. But for now, we’re stuck,” SocGen argues.

EUR/USD is trading circa 1.0730 as of writing.

EUR: Changing Our ECB Base Scenario – ABN AMRO

ABN AMRO Research has changed its ECB base scenario to an earlier QE tapering and a 2018 depo rate hike.

“We now expect the tapering of asset purchases to start somewhat earlier. We think the ECB will start to reduce the monthly purchasing pace from January of next year, in steps of EUR 10bn a month. That would lead to an end of the QE programme by June 2018. The central bank is seen subsequently following with a 10bp increase in its deposit rate in September of that year,” ANBN AMRO clarifies.

All in, ABN AMRO now expects the ECB to make an earlier exit from its super accommodative monetary policy, but still acknowledges that tapering and in particular interest rate hikes are still some way off.