What to expect from ECB today

Today's ECB meeting will be difficult, mainly because central bankers will have to comment on the vague economic outlook for the eurozone. What worries investors is that growth rates in all 19 euro area member states have declined. The single currency rose sharply against the dollar in the past year, rising to $1.22 from $1.06. This tends to affect growth and inflation in the eurozone, because it makes exports more expensive and imports cheaper. Concern for the ECB is also inflation in the eurozone of 1.3%, which remains below the bank's target of just under 2%. This is entirely in line with both the expectations of the central bank and the plans and the gradual abolition of quantitative easing. For this reason, today we do not expect the ECB to undertake a change in monetary policy or to commit to a date when to withdraw the quantitative easing. On the contrary, I expect Mario Draghi's tone to be extremely soft, not excluding the possibility of hinting and extending the QE program (negative for EUR).

What can we expect from EUR and European indices?

If Draghi expresses an opinion in support of QE, it is very likely that we will see a sharp decline in EUR, with the largest reflection expected at EUR/USD. First on the differing monetary policy and second, because of the strong dollar in recent days. It is difficult to talk about EUR appreciation because, as we have said, economic growth is slowing down and the likelihood of Dearly supporting QE cuts is minimal. In support of this, Draghi comments that central bankers should be very careful about reducing and ending quantitative easing. The probability of raising interest rates is also minimal - 5%.

Indices will most likely receive short-term support if Draghi acts to the detriment of the euro. Otherwise, at the appreciation of the euro, I expect negativism to multiply and to see a new low in European indices.

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