"We see three scenarios for the ECB meeting as follows:

1. The ECB is clear and impressively decisive about its easing intentions: we suspect this would be enough to allow for a push towards EURUSD technical support levels around 1.09. If these do break then the natural extension would be to push on towards one-year lows around 1.06 in the weeks ahead, especially if the market is also prepared to price in a resumed Fed tightening cycle with more confidence.

2. The ECB is vague about its likely next actions - this would argue against a near-term range breakout lower for EURUSD, especially if there is any form of squeeze higher in euro area rates. We would expect a move back above 1.10 towards 1.12 in this scenario.

3. The ECB validates the recent speculation in the press about tapering by pointing towards this course of action for 2017: this would likely take EURUSD back towards 1.15 over coming weeks, especially if the market is unsure about the probability of a Fed hike in December. It could also create a virtuous cycle for the currency in that the market may suspect that the ECB anticipates better growth and inflation outcomes and would provide a boost to the many market participants who are looking at the glass as half full for euro area macro performance going into 2017. With oil prices and euro area marketbased inflation expectations on the rise anyway, all it would take would be a relatively positive reaction from European equity markets to more market participants that the worst may be over for the economy and that the need for still-looser monetary policy is much diminished".

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