The European Central Bank is expected to extend its QE purchases by six months to September 2017 and maintain the EUR80 billion monthly purchases in its monetary policy meeting scheduled next week. Lately there has been a lot of speculation on QE tapering, but in it remains it is too early to expect an announcement about ending QE.

Potential QE restriction changes have become less urgent following the fixed income sell-off on the back of Trump’s victory. Nevertheless, the ECB will allow ‘some flexibility’ on all measures, but in practice it is expected that the actual buying will be below the deposit rate or above the 33 percent issue/issuer limit will be limited, Danske Bank reported.

It is premature to price in hikes from the ECB already in 2018. Assuming a hawkish scenario, where the QE programme is extended until September 2017 and then tapered by EUR10bn per month implies the purchases will continue until May 2018, only leaving seven months for a potential rate hike in 2018. In comparison, the Fed delivered the first rate hike 13 months after having finalised the QE tapering.

"The risk to our view is that the ECB members are too divided to agree on maintaining the pace of purchases," the report said.

The market is pricing hikes from the ECB in 2018 with a probability above 50 percent, but at the same time pricing inflation below 1.0 percent until the end of 2018.

Meanwhile, the EUR/USD is trading at 1.06, while at 11:00GMT, the FxWirePro's Hourly Euro Strength Index remained neutral at46.86 (a reading above +75 indicates bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex