BAML: ECB could set up a EUR/JPY dip to buy

BAML sees a trade on the ECB meeting

Bank of America Merrill Lynch FX Strategy Research expects the ECB Governing Council to leave the current stance and communication largely unchanged at its policy meeting on Thursday.

"While we do not expect any hard decision or any significant communication surprise this week, we also believe the policy conversation could be quite fierce from June," BofAML adds.

In that regard, BofAML continues to think that in the face of a still subdued inflation outlook, prudence will prevail and the ECB will opt for small changes to forward guidance in June, slow tapering in 2018 and no policy rate hike before well into next year.

EUR: Buy EUR/JPY on dips.

BofAMl doesn't see direct FX implications from the ECB meeting this week, but argues that the stage is set to start buying EUR/JPY again.

"In this context, we would look to take advantage of any EUR dip if the ECB sounds too dovish this week to buy EUR/JPY," BofAML recommends.

For bank trade ideas, check out eFX Plus.