Bank of America Merrill Lynch - "The Euro has strengthened as the yields in Spain and Italy dropped sharply in response to the ECB bond-buying plan (...) Very light market positioning also supported risk appetite once the ECB event risk went by without a disappointment. Renewed expectations of QE3 in the US following disappointing nonfarm payroll data and the positive Constitutional Court decision in Germany on the ESM also supported the Euro.
Looking forward, the above discussion suggests limited room for further upside (...) In terms of the Euro, whether the Fed will proceed with QE3 in September, or it will give a strong signal that QE3 remains likely before the end of the year is likely to determine the short-term outlook of the currency."