Despite unleashing his bazooka, Mario Draghi - like his colleagues at The BoJ - appears to have hit the limit of his impotence as the European Commission cut its outlook for growth and inflation across the Union for 2016 and 2017. Citing the economic slowdown in China and other emerging markets, geopolitical tensions and uncertainty ahead of the U.K. referendum on EU membership, WSJ reports EU's economists also cautioned that the strength of factors that have been supporting growth in the region, such as low oil prices and a weaker euro, could start to fade. This sparked modest Euro weakness (after a non-stop surge in the last week) dragging down European stocks and darkening the outlook for the banking system further.

As The Wall Street Journal reports,

According to the forecasts by the European Commission, the EU's executive arm, the economy of the 19-country eurozone is expected to grow 1.6% this year. This is slightly below the 1.7% expansion the commission had forecast in February, and the 1.7% it expanded in 2015.

In 2017, the eurozone economy will expand by 1.8%, the commission said, slightly lower than earlier predictions which saw it growing 1.9%.

Growth in the 28-country EU is seen at 1.8% this year, down slightly from the commission's February forecast and lower than the 2% it recorded in 2015. The EU's economic output will likely expand 1.9% next year, also below the 2.0% forecast earlier this year.

The new, slightly lower forecasts highlight how Europe's scars from the financial crisis, and the debt crisis that followed, continue to dampen its recovery.

In its forecasts, the commission said that while cheaper oil and easy monetary policy by the European Central Bank have boosted consumption and exports, the pace of growth across the 28-country bloc and the euro area remains relatively moderate.

This sparked a modest drop in EURUSD...