Sources: ECB leaning toward rate cut, tiering, reinforced guidance in Sept 12 stimulus

This according to five ECB sources..

• policymakers leaning toward rate cut, tearing, reinforced guidance in September 12 stimulus package
• Many also support QE, but opposition from some northern states complicates discussion
• ECB has room for about one year of QED using flexibility under existing rules, no immediate need to change issuer limit
• Any ECB rate cut is likely to be accompanied by tearing
• New ECB guidance will emphasize conditions needed for rate lift off, deemphasized date component
• Discussion about ECB stimulus package open, ongoing, no decision made

Euro zone bond yields fall, Italian 10 year bond yields it new low after report on ECB stimulus package.

The EURUSD move down initially to a new session low at 1.0924 but has since snapped back higher and trades at 1.0952 (presumingly on the strong stimulus package). Resistance remains at 1.0962. A move above could solicit more short covering.