ECB policy meeting preview

Today European Central Bank (ECB) is to provide further guidance in policy meet. Result to be announced at 12:45 GMT, followed by press conference at 13:30 GMT. Meeting is to be held in Frankfurt.

Current policy measures

• Deposit facility rate at -0.20 percent
• Refinancing rate 0.05 percent
• Marginal lending facility rate at 0.30 percent
• ECB started its asset purchase program of € 60 billion from March.
• Due to liquidity concern some front loading of asset purchase is done by ECB.

Expectation today 

• European Central Bank (ECB) is expected to fire next round of bazooka in today's meeting. ECB is expected to use combination of punches today. An interest rate cut, further into negative couple with alteration to asset purchase program.

What to watch out for 

• Changes in growth and inflation forecast as hard data are improving across board. Most pivotal would be ECB's view on inflation and impact of lower oil price and emerging economies' weakness over it.
   
• How divided are governing council over today's decisions. If today's stimulus were unanimous?
   
• Weather ECB keeps the door open for further stimulus or not?
   
• Does ECB leaves the door open for further interest rate cut?

Impact 

• Stimulus comments will be closely scrutinized and also outlook in future.

• Euro would be bearish if Draghi succeeds in beating market expectations. Any large beating would lead Euro towards parity.

• However, trade has been too one sided (short Euro). Any disappointment could lead to large short covering.

Euro is currently trading at 1.056 against Dollar, supports are at 1.048-1.051, 1.024 and resistances around 1.068, 1.077 and 1.082.