Euro sinks as Draghi reveals cuts to euro zone inflation projections

The central bank's statement kept important wording that its bond-buying stimulus program could be stepped up if the economic outlook worsens.

"We would look to buy Euro on dips, in line with our forecast profile and outstanding trade recommendation, as the underlying trend is likely to remain intact if the market simply rolls these outcomes forward to September", said Shahab Jalinoos in a note released to clients on Wednesday.

ECB President Mario Draghi said in April he expected rates "to remain at present or lower levels".

On an annualised basis, the eurozone economy was expanding at a rate of 2.3 percent in the Jan-March period, far outstripping the 1.2 percent rate of the United States.

Aberdeen Asset Management Senior Investment Manager Patrick O'Donnell said:"The ECB is essentially in a holding pattern, waiting for more positive inflation data to come in".

It also confirmed that it would continue with its €60bn per month asset purchase programme until at least the end of 2017 - and maintained the pledge to expand it if conditions deteriorate.

Further pushing yields lower was a remark by ECB President Mario Draghi, who said reducing the central bank's stimulus plan for the region was not discussed at the meeting. To be fair, the leaked inflation and growth forecasts earlier this week had already taken the edge out of this meeting and many people had already prepared to hear a more dovish than a hawkish European Central Bank.

Euro sinks as Draghi reveals cuts to euro zone inflation projections

The ECB also reduced its inflation projection to 1.5 per cent in 2017, down from 1.7 per cent previously, reflecting lower global oil prices rather than any change in underlying price pressures.

Rate-setters at the European Central Bank are more confident that inflation is headed back towards their targetted level.

Draghi said at a news conference Thursday that risks to growth are now "broadly balanced".

It is completely legitimate to expect that the Fed will raise rates next week and it will be interesting to see what the FOMC will hint about the path forward of the Fed's tightening situation.

This situation should have its consequences on the FX markets over the median term. Right now inflation is an annual 1.4 percent. The risk remains the outcome of the general election. The polls close this evening at 10pm local time.

A conservative majority in Parliament of 50 seats or more would be seen as a good result by the conservative party.