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The Dollar Index (DXY) is gaining ground this morning, up by +0.42% at the time this was written, no thanks to any positive developments out of the US. Instead, the Euro, which constitutes 57.6% of DXY, has fallen quickly over the past hour and a half after a draft of the ECB’s new staff economic projections (SEPs), set to be released tomorrow, were leaked to Bloomberg News.

The main takeaway from the ECB’s leaked draft is that the ECB is considering reducing its inflation forecast for 2019, cutting it down to 1.5%. At face value, this is meaningless; but in context of what the ECB has previously signaled market participants, this one data point has particular importance.

Since March, market participants have ratched up expectations that the ECB will back further away from its extraordinary easing measures, including its commitment to keep rates ‘at current levels or lower’ for the foreseeable future. Implicitly, if the ECB is poised to announce that inflation will undershoot its +2% medium-term target for the next several years, then the ECB is in no such hurry to raise rates or withdraw policy stimulus.

Such a development would be a near-term setback for the Euro, which has enjoyed a strong rally in recent months on the back of diminished expectations for more easing, thanks to stronger economic data out of the Euro-Zone and populist political risks fading away after the Dutch and French elections.

With the table now set for the ECB meeting, traders should be primed for a day of higher intraday FX volatility tomorrow. Aside from the ECB meeting, the UK elections will be taking place through the majority of the day (6 GMT to 21 GMT | 2 EDT to 17 EDT), with results due during the early hours of the Asian trading session on Friday. Additionally, former FBI Director James Comey will be testifying, which could impact the US Dollar, Gold, US yields, and US equities all the same.

See the above video for technical considerations and levels to watch for in EUR/USD, GBP/USD, AUD/USD, USD/JPY, GBP/AUD, EUR/GBP, and DXY Index.