The DAX is trading at 9575, up 0.5% as traders await the announcements from the ECB. The consensus is that interest rates will be kept at 0.25%, but there has been mounting pressure on the ECB to take action against deflation.
Inflation in the eurozone is 0.7%, which is well below the 2% target the central bank set out. Despite low growth and high inflation, the euro is relatively strong against most major currencies and this is hampering the region’s recovery. A weaker currency would help boost exports.
Traders will be focusing on the language used by ECB president Mario Draghi, who is likely to state that he sees no evidence of deflation but that the bank has tools available if required.
If Mr Draghi hints at monetary easing in the coming months, the DAX could break through the 9600 mark, a level which it found to exceed over the past two months. As stated previously, it could even move towards 9641. We may see some profit-taking if Mr Draghi completely rules out the possibility of a stimulus scheme which could take us back to 9500.