ECB conclusions after surprise annoucements - Westpac

Tim Riddell, analyst at Westpac explained that the spike today on the ECB’s announcement has effectively placed the high of a likely pre-FOMC range at just above 1.0850. 

Key Quotes:

"Once markets realised that they had misread the tapering and that this decision encompasses a clear easing unravelled initial gains and EUR/USD fell back to trade around 1.0650.

The clarification of the policy extension during the Q&A session underscores the divergence in policy between Eurozone and US. The FOMC’s profile should now dictate the extent of this divergence and so the potential for EUR/USD into year end. 

Conclusion"

"The ECB has surprised with an easing of policy and a reduction in its self-imposed restriction.
Forecasts are not substantially different, but ECB has clearly stated a more dovish bias despite providing greater symmetry from its more flexible policy.
EUR will now be at risk of being a funding currency of choice once markets address further Central Bank Policy meetings into year end.
Bund yields should be driven lower in the shorter end of the curve, pulling regional curves with it for a bear steepening of curves.
The ECB is effectively providing support in depth and for longer with the flexibility to alter the parameters of this support."