EURO acting hyper after ECB’s rate decision, gains seem to be unsustainable

The ECB's cut in the depo rate was largely anticipated about 15 bps after President Draghi mentioned at the October press conference that such an option had been discussed already at that time, and as other board members since then confirmed that this was a serious option.

During the press conference President Draghi will present the updated staff macroeconomic projections, which we believe will be largely unchanged, with a minor reduction in the inflation forecast for 2017 from 1.7% to 1.6%.

The dollar is giving up the gains only for the two following reasons,

The ECB's decision to cut the deposit rates by 10bps to -0.30% from minus 0.2% are cushioning a bit, while expectations were minimum 15-20 bps, so we think this as rather a disappointing for some set of market participants.

ECB left its key lending rate unchanged at a historically low level of 0.05%.

Currencies typically weaken when central banks expand their monetary easing programs.

Market strategists expect the ECB to announce a minimum expansion of the bank's €70 billion monthly bond buying program.

While on the flip side, unemployment claims in US rose by 9000K to reclaim 269K, as result dollar seems to be slightly weaker. But despite the sharp bounces in euro we are pretty much certain and biased about dollar's rebounding.