*The risk of disappointment is high; expectations are for a rate cut and another round of QE  
*Mood is intense among policy members but Draghi can get things his way

European markets are trading higher ahead of the most important event of this week. Mario Draghi, the president of the European central bank, is going to face one of the most antagonistic policy meeting today in his era of the presidency today. The probabilities of the ECB disappointing the market expectations are quite high because markets are expecting a big bazooka from the ECB today.
The Expectations 
  • In September, cut in the deposit rate by another 10 basis points to minus 0.5 percent AND announcement of asset purchases  
  • In October, the start of asset purchase- the quantitative easing
  • In December, cut in the deposit rate by another 10 basis points to minus 0.6 percent
Intense Climate 
One factor which is largely priced in the euro-dollar pair is a further rate cut while the president is likely to face a very tense mood among the 25 members governing council. Speculators are hoping for another round of quantitative easing to be announced today because of the fading growth and inflation in the eurozone. However, it is countries like Germany and France which do not see any compelling reason to resume quantitative easing again. Excuses such as trade war and Brexit are going to keep the scale heavier on Draghi’s side     
A Remarkable Shift In ECB’s Policy 
Mario Draghi will try his best to please the market either with his words or with his action. This is going to be a remarkable shift in the ECB’s policy especially, when the bank was so confident only 9 months ago when it said it was done with cutting rates and buying debt.
The Excuse 
Draghi can always lean on this excuse: other major central banks have started to roll back their monetary policies in order to address the feeble growth.
Remember, the Federal Reserve gathering taking place next week is highly anticipated to cut the interest rate again by another 25 basis points. So, the ECB is only cutting the interest rate by 10 basis points, not that arduous at all from this perspective.       
The Main Bone of Contention 
Draghi has the reputation of getting things his way, however today the main bone of contention is going to be another round of bond purchases. Germany, France, and Holland have signaled their skepticism. If another round of bond purchases isn't announced today markets aren’t going to be very happy and we could see an intense sell-off across all major European benchmarks.
I believe that Draghi is going to target €30 Billion a month in asset purchases and the timeline for these purchases going to span over a year. This is the most sticking point as it requires redefining of the rules with respect to whose debt the ECB is going to buy.        
We experienced tremendous moves in bond yields during August and also in September. The 30-year bond yield for Germany is already sub-zero. Clearly, the smart money was ahead of the game, having said this, in the past few days we have seen investors scaling back from those bats and this is purely due to the skepticism shown by the hawkish members of the ECB.
What About Euro and Where Can It Go? 
We believe that a large part of this upcoming dovish monetary policy is already priced in. The factors which can move the euro up and down are the amount of bond purchases a month if any, and the tone of the ECB’ president