Derek Halpenny, European Head of Currency Strategy at the Bank of Tokyo Mitsubishi UFJ, believes 'talking down' the EUR has been ineffective so far. "There has also been increased speculation over additional easing by the ECB which was reinforced yesterday by numerous comments from ECB Council members suggesting the opposition to a deposit rate cut may well be easing. ECB Council members Weidmann, Liikanen and Makuch all spoke of plans for further easing with both a deposit rate cut and some form of QE possible." "While the QE possibility was mentioned, it remains unlikely that this could be done in large magnitude given the legal hurdles of buying sovereign debt. After the German constitutional court decision on OMT, we do not expect a large scale QE program like implemented by the Fed, BOJ and BOE." "Crucially though Jens Weidmann stated explicitly in an interview with MNI that a further appreciation of the euro could notably impact the inflation outlook that would trigger easing action. He added that negative interest rates would “appear to be a more appropriate measure than others”." "This is consistent with our view that a deposit rate cut is more likely than QE and that it might well be an appreciation of the euro that triggers policy action. ECB staff projections this month were based on a EUR/USD rate of 1.3600. However, as we saw yesterday words are no longer having an impact and action will be required to push the euro notably lower from here."