The reaction to the ECB may be more important than the details
It's tough to get a read on the market here
Kit Juckes from SocGen makes a good point in his morning note today. The market is weighing all kinds of details around the ECB decision but even with all the details in place, it's tough to tell how the market will react. Increasingly, the focus is shifting to monetary policy.
The ECB is likely to throw the kitchen sink at the economy, with a new QE programme and a rate cut, but at the risk of sounding like a broken record, it's the fiscal bazooka that's needed now, not the worn out monetary one. From the narrow perspective of the FX market, however, the reaction to what the ECB does (or doesn't do) will be informative. There are still euro shorts, there still isn't any economic growth, little growth, but there is little or no new negative news. Is this the point when the euro's downtrend starts to fizzle out?
What the decision will tell us is whether the ECB can have any effect at all on the currency any longer.