0. open a terminal in VM1 and VM2, type ifconfig to find the ip address of your VM1 and VM2. (it's not this one: 127.0.0.1).

1. on VM1, type ssh-keygen -t rsa, keep typing Enter 3 times at the prompt.

for example:

[01/14/19]seed@VM:~$ ssh-keygen -t rsa
Generating public/private rsa key pair.
Enter file in which to save the key (/home/seed/.ssh/id_rsa): 
Enter passphrase (empty for no passphrase): 
Enter same passphrase again: 
Your identification has been saved in /home/seed/.ssh/id_rsa.
Your public key has been saved in /home/seed/.ssh/id_rsa.pub.
The key fingerprint is:
SHA256:vIryVpWhGnQK/BIcpzYz803D+XwfwepPQ3osXlYg+1Y seed@VM
The key's randomart image is:
+---[RSA 2048]----+
| o...            |
|  =o.....  .     |
|  B= o=. o. +    |
| ..*+o.=o  + o   |
|   ..o..S + o E  |
|    . .  + * +   |
|     .  . + @    |
|  . .. . . O .   |
|   +o .   . .    |
+----[SHA256]-----+

2. on VM1, type "scp /home/seed/.ssh/id_rsa.pub 172.16.228.129:/home/seed/.ssh/authorized_keys"

Note: replace 172.16.228.129 with your VM2's ip address.

for example:

[01/14/19]seed@VM:~$ scp /home/seed/.ssh/id_rsa.pub 172.16.228.129:/home/seed/.ssh/authorized_keys
seed@172.16.228.129's password: 
id_rsa.pub                                                                                                                                                                       100%  389     0.4KB/s   00:00    

3. Now you should be able to ssh from VM1 to VM2 without providing the password.

for example:

[01/14/19]seed@VM:~$ ssh 172.16.228.129
Welcome to Ubuntu 16.04.2 LTS (GNU/Linux 4.8.0-36-generic i686)

 * Documentation:  https://help.ubuntu.com
 * Management:     https://landscape.canonical.com
 * Support:        https://ubuntu.com/advantage

3 packages can be updated.
0 updates are security updates.

Last login: Wed Nov 28 11:15:23 2018 from 172.16.228.1

4. repeat step 1 on VM2.

5. on VM2, type "scp /home/seed/.ssh/id_rsa.pub 172.16.228.128:/home/seed/.ssh/authorized_keys"

Note: replace 172.16.228.128 with your VM1's ip address.

6. Now you should be able to ssh from VM2 to VM1 without providing the password.