AUTOREFRESH 
EUR/USD drifts off lows; battle between shares and ECB fears
Volumes are light and interest is muted this afternoon, dealers relay. Prospects have improved for the ECB to act aggressively at tomorrow’s meeting with inflation miles below the ECB’s 2% target. Trichet himself says inflation will be below target for months, if not years.
The timing of any move to quantitative ease remains unclear at the moment; the ECB tends to move incrementally so a move to QE could have to wait until May after a 50 bp cut tomorrow. But if they are smart, they will go ahead and hint broadly at an upcoming move if not announce it outright. Dealers are preparing for the risk that the ECB goes all-in tomorrow. If they do, expect a dive in EUR/USD. If they merely cut 50 bp, a short-term pop is likely, but we would expect any rally to be sold into with the market quickly concluding that the ECB is merely postponing the inevitable.
This afternoon is mostly position squaring with bulls trimming longs and day traders buying dips as US equities hold gains. Expect choppy trade through the 11:45 announcement from the ECB tomorrow. EUR/USD trades now at 1.3223.
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