The December 3rd decision and subsequent press conference is perhaps the most important event for the euro exchange rate complex of 2015.
The ECB cut their deposit rate to -0.3%, in line with expectations. The EUR to USD conversion has rallied on the event confirming a greater cut was needed to trigger further selling pressure.
The press conference started at 14:30 CET and appears to have disappointed markets hugely with the currency pair taking another huge leap higher.
The ECB dodged introducing a two-tier deposit system for banks and instead opted to broaden their asset buying programme to include regional debt. This was clearly not enough for those looking to chase the euro lower.
European equity markets are seen deeply in the red with the Germany 30 down by over 3%.
Enrique Diaz-Alvarez at Ebury reckons that the ECB had to pare back the agression on their intended expansion thanks to the hawks at the Bundesbank - "they'll fight Draghi every step of the way it seems."
An assured Draghi noted “favourable liquidity conditions” and an “appropriate monetary policy stance” while leaving the door open to further action.
Expectations ahead of the event had priced in an expansion of the asset purchase programme in the region of 10-20 billion euro.
"The Euro gains as a direct result to interest rate cuts and an extension of QE feels counter-intuitive, yet highlight the extent to which Draghi has historically surpassed market expectations in announcing new measures," notes Richard de Meo at Foenix Partners.
For the euro to dollar exchange rate a big decision is needed or the now crowded short trade risks unravelling spectacularly.
"Amidst such elevated expectations the risks of under-delivering are higher than during previous episodes of ECB action," says Stretch.
If Draghi wants to avoid a tightening in monetary conditions, via an uptick in the currency, he has to at the very least meet minimum stimulus expectations.