Thursday’s ECB meeting is one of the most important event risk this week.  EURO has been biding its time trading between 1.1235 and 1.1475 pre-ECB. Which end of this range breaks hinges upon Mario Draghi’s tone. If he’s concerned about the strong euro and talks about the possibility of more stimulus, then 1.1235 could give.  If he simply says they need more time to see the effects of stimulus and points to recent data improvements as a sign of their easing measures working, euro could break 1.1400 and aim for recent highs.

The following table shows how the eurozone economy changed since the ECB last met – from a data perspective, the central bank has less to worry about in April vs. March when there was significantly more deterioration than improvement.  So the question is whether the 3 to 6 cent rise (depending where you’re measuring from) in EURO since easing rings alarm bells for the central bank.