1. Lagarde manages to convince the market that rate cuts will not start as early as April with a convincing hawkish statement and new projections along these lines. That would be the most Euro-positive scenario.

2. On the other hand it could also provide dovish comments that do not exclude imminent rate cuts. That would also explain why ECB officials were unable last week to provide any clarification why rate cuts are not an issue for now. That would be a negative scenario for the Euro.

3. And finally, there is also the middle ground. It could underline that given core inflation rates that remain too high, rate cuts are not an issue yet, while not excluding them either if the data becomes better. Almost the same as what we have heard from ECB officials over the past weeks.

It is difficult to tell which of these scenarios is going to turn out to be correct and this will depend decisively on Lagarde’s communication abilities. There are arguments to support each of them. The result is likely to tend towards scenario 3, i.e. she will try to contain the rate cut expectations without committing too much.

However, that does not exactly make it any easier to project the effects of the ECB meeting on the Euro. Although the downside potential could be limited due to rate cut expectations that have already gone a long way, we are nevertheless likely to face a volatile session today due to the uncertainties. And of course, there is always the risk that things will go completely differently than we imagine. Wednesday's Fed meeting was another impressive reminder of this.