ECB will announce its interest rates today at 12:45 GMT which will be followed by a press conference from ECB President Mario Draghi, 45 minutes later. Market participants are widely expecting an interest rate cut ranging from 10 to 20 basis points (0.1% – 0.2%) but an expansion of its QE program by 10 billion euros a month cannot be ruled out. Should that happen, the downward pressure on the EUR will be strong.

As a reminder, Back in December 3, 2015 the market had expected also an expansion of the QE program, following rhetoric from Draghi that supported this approach. When that did not happen, as the market widely expected, a huge stock market selloff occurred. Given the challenges of the outcome, there is a possibility that the announcement today could disappoint again which in turn can lead to a higher EUR as it did in December. So bottom line: it is the statement at 13:30 that needs to be closely watched.

The global market slowdown has forced the ECB to keep easing to achieve growth. Lower commodity prices have kept the threat of deflation looming over members of the European Union. The ECB has now entered the uncharted waters of Negative Interest Rate Policy in an effort to use unconventional monetary policy tools as it struggles to unite the diverse membership of the union.

The market will be awaiting aggressive action and the EUR/USD will be following the final monetary policy decision and President Mario Draghi’s press conference. The European Central Bank could suffer another blow to its credibility if it falls short of expectations again. Mario Draghi has used bold rhetoric, but if the rest of th