Call it divergence—and the wider the gap between the two regions in policy and economic fortunes, the more compelling the case for the divergence trade.
Put simply, buy dollars and dump euros. Or sell the EUR/USD cross.
Data from Kensho, a tool used to quantify historical market events, shows that the EUR/USD tends to fall after easing action from the ECB or dovish statements from the central bank's president, Mario Draghi.
In some cases, such as Thursday for example, the EUR/USD has instead risen after ECB easing, as investors question the effectiveness of such action. But if you think that ultimately the euro will weaken as policy stays loose and economic growth sluggish, then divergence is the name of the game and the recent bump in the EUR/USD could be an opportunity.
The EUR/USD is the obvious trade. But there are other plays that have proved profitable when divergence is back in play. Using Kensho, we looked for some of the best trades since the start of 2015 when the EUR/USD has fallen 3 percent or more in one week.
A weaker euro is good news for the European economy and companies, as it makes exports more competitive. So, not surprisingly, European equities surge.
Germany's DAX index has traded positive in all seven occasions and returned more than 4 percent on average. The eurozone's blue chip Euro Stoxx 50 index has gained ground in every instance but one, and returned 2.7 percent on average.