With one of this week's major central bank decisions in the books, investors are turning their eye to the European Central Bank's decision on monetary policy, due out Thursday before U.S. equity markets open.
Boris Schlossberg, managing director of foreign exchange strategy at BK Asset Management, told CNBC's "Trading Nation " on Wednesday what investors should be focusing on. Here are his points to watch.
• The European Central Bank appears to be gung-ho on normalizing monetary policy and ending its so-called easy money era of historically low interest rates and quantitative easing.
• Meanwhile, the Federal Reserve is ahead of its European counterpart; the Fed has already been firmly on a path to interest rate normalization since late 2015. Mario Draghi, president of the European Central Bank, appears to want to ensure that the discrepancy between interest rates in Europe and the U.S. does not widen further.
• If the ECB on Thursday reaffirms its commitment to tapering by September, the euro could rally; it's fallen nearly 5 percent in the last three months against the U.S. dollar.
• A hawkish ECB could lift the euro to 1.20, but a dovish Draghi could see the euro/dollar pair slide to 1.15. Of course, this would bode poorly for euro long positions, but could benefit European stocks mightily as credit conditions and exchange rates will give them a massive advantage against U.S. multinationals.