Euro Tumbles; Stocks, Futures Surge After Draghi Says ECB "Will Reconsider Policy Stance In March"

Back in September, Draghi set the stage for the unleashing of an imminent QE bazooka, something the market was fully convinced would take place on December 3, pushing the EUR lower by nearly 10 big figures and pushing European stocks to nosebleed levels. When it didn't, and when Draghi unveiled a water pistol instead, the EUR soared by a near record amount, and Euro assets crashed.

Fast forward to today, when as we previewed earlier today, nobody was expecting much if anything from Draghi, to wit:

[DB] concludes that "the ECB will be reactive in addressing the risks to its inflation mandate and will wait for more visibility on the three key fronts." In other words, nothing, which of course may be just the "reverse psychology" moment Draghi needs to actually surprise markets: if his massive build up was so disappointing last month, why not do the reverse today?

He did precisely that, when moments ago during the ECB press conference Draghi pulled a page straight from the September presser when he said that as a result of an "increase in downside risks" and a "significantly lower inflation outlook than in early December", the ECB "will need to review" its monetary policy stance in March, blaming tumbling oil prices for the collapse in inflation expectations, and suggesting that the QE expansion which was supposed to take place in December, but didn't, will now most likely take place in March.

Of course, the ECB's inflation expectations hockeystick was visible to anyone who looked for more than 2 seconds as the central bank's inflationary forecasts...

... which were based on $52 oil at the end of 2016, so only algos could be surprised that the ECB is far, far behind the curve.

And yet surprised they were, because just as Draghi once again started jawboning and hinting that the ECB is back to unveiling some bazooka which doesn't really exist, the EUR crashed...


... sending the DAX and other European equity indexes surging...

... also pushing US equity back to their overnight highs.

And so the bogey has been set, with expectations once again rampant that the ECB will do much more in two months.

Will it actually do that, or will everyone be crushed like they were back in December? It may depend on oil, where if the steep decline continues, this time Draghi may have no choice but to actually follow through with his threats.

As for the market reaction, keep a close eye on the duration of the risk bounce: if risk refuses to push higher from here, or worse - tumbles - the market will have clearly given its verdict on all current and future Draghi jawboning and called the ECB's bluff: no more words, actions are now demanded.