While it's almost certain European Central Bank (ECB) President Mario Draghi will announce something new on Thursday, traders remain split on what fresh action he will take and are furiously positioning themselves to take advantage of an expected jolt in asset markets.
And it's not just Europe. Investors around the world are now sitting up and taking note of what the euro zone's central bank is doing to calm deflation fears in the region. Stock markets have been relatively muted, especially in Europe, in recent weeks in anticipation of action while the euro has dipped against the dollar below its 200-day moving average.
Could the euro rise?
Trading at almost $1.40 at the start of May, the downward spin for the euro has taken it to $1.36. The single currency barely flickered on Tuesday after a weaker-than-expected reading for euro zone inflation, meaning that much of Draghi's announcements could already be priced in.
"(This) implies that the element of surprise to drag down the euro requires a higher bar i.e. aggressive action,"Ashraf Laidi, the chief global strategist at brokerage City Index told CNBC via email.
Read More All eyes on the ECB: Negative rate looms
A simple cut to the ECB's main refinancing rate and a negative deposit rate - effectively charging banks to park cash at the central bank - will not be enough to drive the euro lower, he said. These policy actions are widely expected by economists and traders said that it would be classed as a "disappointment" if they were announced without further measures. A client survey from Nomura last month showed 95 percent of respondents expected a refinancing rate cut, and 88 percent expected a deposit rate cut.
Angus Campbell, a market strategist at FXPro.com told CNBC via email that investors want to see "concerted action" from the ECB. He added that if there is disappointment in the form of something "cursory" like a short-term LTRO - which provides cheap loans to banks - or similar, then the euro could test near-term resistance around 1.3770.
"Even if the ECB disappoints, the negative trend for the euro, which commenced a month ago, could continue into the second half of 2014 seeing EUR/USD test 1.3450 then 1.3300," he said.
However, there is also the added complication of asset purchases, according to some analysts. If the ECB announces aggressive bond-buying, that would bring more buyers to sovereign debt markets. These investors would need the euros to purchase government debt, thusthe single currency would be bolstered in the medium term.
Stocks to fall?
While stocks would remain well supported due to global liquidity helping the asset class, analysts also predict any initial disappointment - such as the lack of Federal Reserve-style asset purchases - could push bourses sharply lower in Europe on Thursday afternoon.
Marshall Gittler, the head of Global FX Strategy at IronFX believes that investors want to see something that will have a "genuine impact" on the economy.
"Another 25 basis point cut in rates will not change borrowing conditions materially for most companies and therefore wouldn't be a reason to buy stocks," he said via email.
"(Only cutting rates) would show a lack ofurgency and be taken as 'too little, too late.' I think that would cause stocks to fall and the euro to rally."
Chris Beauchamp, a market analyst at IG Markets agrees, adding that the hype surrounding the ECB meeting has been pushed so far that stocks look vulnerable to disappointment. Valuations would be a lot more "toppy" without the expectations of central bank easing helping to prop them up, he said. Campbell, agreeing with Beauchamp, said that market participants should stay alert as any weakness after Draghi's press conference could present a buying opportunity.
The monetary policy decision by the ECB isdue at 12.45 p.m. London time on Thursday with the press conference due tobegin at 1.30 p.m. London time.
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