European Central Bank (ECB) President Mario Draghi was set to face scrutiny over what steps he would take on Thursday's monetary policy meeting. Speaking at the press conference following the meeting, Draghi decided not to stray from his poker face and not let slide all the recent commentary about the impact of a strong euro on the Eurozone's economic recovery.

Draghi has added "appreciation of the exchange rate" as a downside risk to inflation. Specifically he said, "Risks to the outlook for price developments continue to be seen as broadly balanced over the medium term with upside risks relating to higher administered prices and indirect taxes, as well as higher oil prices and downside risks from weaker economic activity and more recently, the appreciation of the exchange rate."

Draghi also made an implicit reference to how a strong euro would affect the European recovery. "The risks surrounding the economic outlook for the euro area continue to be on the downside. They relate to the possibility of weaker-than-expected domestic demand in exports (...)," he said.

Analysts are expected to narrow in on Draghi's commitment to accommodative policy. Monetary policy "will remain accommodative with the full allotment mode of liquidity provision," he said.

More to the point, Draghi seemed to indicate that the second-half recovery will be contingent on accommodative policy. Reading between the lines, analysts will ask whether Draghi believes enough is being done.

"Later, in 2013, economic activity should gradually recover supported by our accommodative monetary policy stance, the improvement in financial market confidence and reduced fragmentation, as well as a strengthening of global demand," he said.

From the onset of the press conference until the final moments of the European trading session, the euro took an immediate dive south, taking out the relatively weak support level at $1.3460 and going on to test $1.3400. It had been trading at around $1.3550 ahead of the press conference.

The opinion among analysts will be that the Eurozone cannot allow itself removed from the extraordinary accomodative measures taken in other global economies.

JP

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