At a Chatham House event a day earlier, O'Neill, former chairman of Goldman Sachs Asset Management, noted that he had been sitting in the same exact seat in which Draghi made his "whatever it takes" comment two years ago.
"And it reminds me, obviously having worked with the guy at some point, he shouldn't be underestimated," O'Neill said. "So, I think the key is what he says, as opposed to what they do. He knows what he's done by setting the market up to have some strong expectations to some rate cut and maybe more. I think the thing to really watch will be what he has to say about any follow-up moves and any subtleties about the importance of the euro."
European equities closed lower a day ahead of the ECB meeting in anticipation of stimulus measures.
O'Neill said that he expected Draghi to parse words carefully.
"In particular, my suspicion is what he'll try to create is the notion that the euro has no upside from here, so the market might as well sell the euro for him, which, of course, would take pressure off the ECB actually doing any more," he said. "That'd be my hunch."
O'Neill added that he expected a just-right response from the central bank.
"Anybody that's got too-high expectations for the ECB hasn't been around for the past 13 years. I mean, that's not generally how they are," he said. "But that said, I think, as we saw two years ago with his 'I'll do whatever it takes,' when he really needs to deliver, Draghi has quite the capability of it.
"On balance, I don't think he'll disappoint—whatever that means—tomorrow."
If whatever action Draghi takes falls short of what markets had expected, the euro could rise, but O'Neill said that he didn't foresee a long-term rise for the currency.
"I guess tomorrow there's a chance for a small bounce in the euro if he doesn't say the right thing as such. But I think the really interesting thing is how weak the bounce would be because my hunch is we're starting in the beginnings of what could be a multi-month decline of the euro," he said. "One twenty-eight I kind of had in mind back in the spring, and I see no real reason to change that. But it could go further than that."
O'Neill also said that India's election of reformer Narendra Modi as prime minister provided a good deal of potential for the subcontinent.
"I think the markets were right to be really excited about him in advance of the election," he said. "Lost a tiny bit of the momentum the past few days now that things have settled down, but I really think this could be the beginning of a big rerating of India, not just within the emerging world but on the basis of India relative to the rest of the world, too."