ECB set to unleash further monetary stimulus through hints on easing

The ECB chief Mario Draghi updated last weekend that the central bank is observing and evaluating new stimulus measures that could be unveiled as soon as December and is prepared to cut its deposit rate deeper into negative territory.

His comments sent the euro sliding 2.0% overnight, its second largest fall since 2011, eclipsed only by the drop on January 22 this year when the ECB announced its current bond buying scheme.

Against the British pound, the common currency fell to 72.05 pence, near its Sept 22 low of 71.97. In the option market, risk reversal spreads widened in favour of euro puts, or the right to sell the euro, with one month spread hitting the highest level since July.  

Still, some analysts are of the opinion that it's too early to say if the euro will break out of its rough USD 1.11-15 trading range in the past couple of months, and to head below USD 1.10.

"When (ECB executive board member Benoit) Coeure said in May that the ECB could expand its QE, the euro fell below USD 1.10. But what's different now from that time is the U.S. monetary policy outlook," said Minori Uchida, chief currency strategist at the Bank of Tokyo-Mitsubishi UFJ.

The euro slid to two-month lows against the dollar on Friday after the European Central Bank opened the door to more stimulus as early as December, leaving the single currency shaken a day after it had posted one of the biggest falls in recent years.

The euro fell to as low as USD 1.1072 in early Asian trade, breaking below the USD 1.11 mark, which has been a major support for the currency in the last several weeks.