The ECB is non-compliant (or so it seems) ...

IMF Chief Christine Lagarde. Is she pointing at Mario sitting in the front row?

Maybe yesterday's euro price action was foretelling of today's jump in the price of the euro.

Yesterday the IMF spoke up, per our blog post.

Today the European Central Bank kept rates unchanged. Basically, they didn't do what the IMF suggested probably will need to be done to avoid deflation.

To wit, ECB Chief Mario Draghi's post-game press conference actually conveyed the opposite view. His comments seemed aimed at assuring everyone that inflation will soon be picking up.


The IMF sets the bar low and the ECB acts as though it will be cleared easily.

Clearly, the result - a rising euro - flies in the face of the obvious dynamic that should be pushing the euro lower. That dynamic is one of perceived Fed tightening amidst continued ECB accommodation.

How much longer can this show go on? How much longer can the ECB assure us of inflation generation without some type of pick-up in loan growth and actual inflation data? Is the IMF simply a pawn (surprise?) meant to play bad cop so the good cop can claim assumed victories and boost community morale?

The short euro idea is looking ugly right about now. But maybe it's just a matter of sufficiently shaking out all the convinced euro bears before the actual downturn commences. Key technical resistance is in play. Good luck out there.