The phrase “second-half recovery” is among my favorite market cliches.

For years after the crisis, one pundit or another was talking about a H2 recovery in the United States that never seemed to come. Last week, Draghi took up the mantle emphasized ECB staff forecasts for a gradual recovery in the second half despite a round of soft economic data.

With the second-half recovery now part of the narrative for euro traders, how it develops will determine the next big move in the euro.

Today’s OECD leading indicators report and German trade data suggest some foundation for the optimism but risks are everywhere. If a recovery begins to blossom in the spring, expect the euro to hold above the November lows near 1.2650. If optimism fades it puts rate cuts back on the table and the euro will likely fall to 1.20.