Euro under pressure on rumors of further ECB stimulus

European markets maintained early gains yestarday afternoon trading after ECB President Mario Draghi talked up the prospect of Euro under pressure on rumors of further ECB stimulus amidst talk that the central bank could buy securities backed by bad Italian bank loans. Closed US markets acted to dim volatility.
No severe sell-off in Chinese markets after a week’s holiday and a massive rally in Japan allowed financial stocks to break out of the doghouse and lead Europe’s major indices higher buoyed by HSBC’s decision to stay in the City of London.
Mr Draghi reiterated the possibility of further rate cuts or changes to the asset purchase program saying "The Governing Council will review and possibly reconsider the monetary policy stance in early March". 

The ECB has do far avoided cutting the main refinancing rate into negative and if the market reaction to the Bank of Japan is anything to go by, it would be best keeping it that way.
The ECB president addressed the sell-off in European banking shares, admitting there is a sub-set of banks with elevated levels of non-performing loans but said the Euro-area is in a good position to reduce bad loans. There was some signs that the market may force the ECB away from negative interest rates because of the negative impact on banks. Mr Draghi said the ECB would "analyse the state of the transmission of our monetary policy impulses by the financial system and in particular by banks."

Extract from a report by Jasper Lawler, Market Analyst, CMC Markets