The ECB kept refinancing rates unchanged at 0% as expected. But, the Euro started tumbling lower nonetheless even before Mario Draghi started speaking. The tumble is continuing even as Mario Draghi holds the press conference, so he must be saying some dovish things, right? Let’s see.

• Softer patch that we saw during Q1 seems to extend to Q2 (dovish)
• Increased uncertainty from risks (dovish)
• Sees progress on growth because of fiscal expansion in the US, which will likely affect the EU economies in the medium term (hawkish)
• Expect rates to remain unchanged at least until summer 2019 (dovish)
• Increased geopolitical and domestic uncertainty (dovish)
• 2018 GDP growth seen at 2.1%, down from 2.4% in March (dovish)
• Inflation expected at 1.7% versus 1.4% in March (hawkish)

As you can see, Draghi’s press conference leans a bit on the dovish side. There are no rate hikes in sight and the economic growth has declined. Inflation has picked up, which we have highlighted lately, but the economy needs to grow as well.

The political risks are coming from all fronts as Draghi highlighted. Trade tariffs from the US, the political situation in Italy and Spain, and then Brexit. Just too many headaches for one central banker. So, it is a dovish conference and the Euro has nearly lost 200 pips already.