Authored by Mark Cudmore, Bloomberg markets live commentator

Thursday’s ECB meeting matters more than many financial participants seem to think. It may be subtle, but it’s a binary moment for the region’s policy makers, with the balance of risks skewed toward a euro-bearish outcome.

It’s fair to acknowledge next week’s U.S.-China trade talks are far more immediately relevant to global markets than anything Draghi will do or say today. But that overlooks the fact that it’s crunch time for the ECB and the euro.

It’s now clear that the disappointing European economic data in the first half of 2018 wasn’t just due to temporary factors after all. Far from it, the situation continues to deteriorate. Draghi can’t fudge the issue any longer.

The problems are widespread. Whether or not it avoids a technical recession, Germany’s economic outlook is declining more rapidly than water levels in the Rhine (which was the latest “one-off” excuse for disappointing GDP).

The Gilets Jaune protests have sustained far longer than first anticipated, and so has the associated economic impact on France. The Bank of Italy is warning its economy may have slipped into a fresh recession.

With the currency union’s three largest economies in clear distress, growth outlooks across the bloc are starting to be cut. And I haven’t even mentioned the ongoing Brexit uncertainty which is negatively affecting so many countries. Unsurprisingly, eurozone CPI forecasts are also being slashed - the 2019 consensus is already down to 1.5% from 1.7% at the start of the month.

Neither inflation nor growth look likely to provide justification for any ECB policy tightening over the next 18 months.

If Draghi denies this, he will undermine the euro through a hit to his credibility. If he confronts the elephant in the room, he must then clarify whether policy is set to be normalized regardless of economic data (bullish euro) or whether rate hikes are a pipe dream (bearish euro).

Bloomberg’s Euro Index is at an important inflection point, hovering just above its 18-month lows. The Citi Eco surprise index is at levels seen during recessions.

Draghi’s track record suggests he’ll take the dovish tack today but, either way, the euro will be set on a fresh medium-term trend. It just may not come with dramatic headlines.