The European markets went on a high-flying mode after European Central Bank (ECB) president Mario Draghi reassured of a more intensified and protracted QE measure, if need be. While the president first hinted at the need of an oversized QE measure in September, he reaffirmed the evaluation of the monetary policy by the end of this year based on a volley of economic data.

Going by what Draghi said recently, we can conclude that the ECB is ready to go all out and charge up the ailing Euro zone economy even if it requires printing money over and above the ongoing program.
 
Notably, the ECB started its bond buying program in March. Per the program, the ECB will inject €1.14 trillion ($1.16 trillion) into the struggling Euro zone till September 2016. Added to this, many European nations have kept the key rates at rock-bottom levels and have even introduced negative interest rates.
 
What’s Behind This Dovishness? 
 
Though domestic demand remains reasonable, slowing emerging markets, a still-stronger Euro (especially given a subdued greenback on the accommodative Fed) and likely ripple effects from the resumption in oil price decline will likely foil growth and inflation of the region, per Bloomberg.  
 
Markets have already started to invest on the possibility of further easing (by the ECB) in December and are closely eyeing the imminent data flows. The Eurozone has slipped into a deflationary zone in September (first time after March when the ECB launched the QE program). Economists now expect stagnation in inflation in October after it dropped 0.1% in September.
 
In early September, the ECB had forecast Eurozone inflation of 1.1%  for the next year, down from its June forecast of 1.5%, and GDP growth of 1.7% against the prior expectation of 1.9%. Moreover, thanks to the latest market upheaval induced by the Chinese market rout and the Fed lift-off ambiguity, the Euro gained strength while the greenback weakened. If the Fed continues to stay put for longer, the Eurozone will likely lose on export competitiveness and liquidity.

All these definitely pave the way for a stepped-up QE policy. Sensing further easing potential, the Stoxx 600 has added 8.1% so far in October that position it for the largest monthly rally in six years. However, the index is still way behind the high it hit in April and thus could be due for further gains if the bulls keep chasing. Meanwhile Euro ETF — CurrencyShares Euro ETF (FXE - ETF report) — was down 2.8% in the last five days (as of October 26, 2015) which gives hedged ETFs an edge over the un-hedged version (read:Great ETF Picks for 2nd Half of 2015).

ETFs to Watch

Below we highlight 4 European ETFs that have recovered strongly in recent sessions and might add gains in the days to come (see: all the European ETFs here):

WisdomTree Germany Hedged Equity ETF (DXGE)

DXGE has amassed AUM of nearly $327.7 million. It charges investors 0.48% in annual fees. This Zacks Rank #2 (Buy) ETF holds about 77 securities in its basket with none holding more than 6.70% share. The product has a tilt toward Consumer Discretionary at 21%, followed by Financials (19.7%) and Industrials (16.5%).

The fund was up 6% in the last five trading sessions (as of October 26, 2015). Another Germany ETF iShares Currency Hedged MSCI Germany ETF (HEWG) also added 6% during the same frame (read: Follow Goldman with These European ETFs).

WisdomTree Europe Hedged Equity Index Fund (HEDJ) 
 
The fund appears rich with AUM of nearly $20 billion. Expense ratio comes in at 0.58%. Holding 130 securities in its basket, the product is pretty well spread out across components with no firm making up for more than 5.74% of assets. Consumer Staples, Industrial, Consumer Discretionary, Financials and Health Care have double-digit weight in the fund.

In terms of country allocations, France and Germany are leading with 25.3% and 25.3% share, respectively, followed by Spain (17.2%) and the Netherlands (17%). The Zacks Rank #3 (Hold) fund was up 5.2% in the last five trading sessions (as of October 26, 2015).
 
Europe Hedged SmallCap Equity Fund (EUSC)
 
The fund looks to follow the WisdomTree Europe Hedged SmallCap Equity Index to provide exposure to close to 240 of the smallest European companies. This ETF has amassed about $232.6 million.
 
The product is highly diversified with no stock accounting for more than 2.08% of the portfolio. Sector wise, Industrials gets the highest exposure with 25.7% of the portfolio. Financials and Consumer Discretionary also get double-digit allocation each, while Energy gets the least exposure with only 2.57% of the basket.
 
As far as country exposure is concerned, Italy (21.1%), Germany (17.5%), France (16.5%) and Finland (12.8%) get top priorities. The fund charges 58 bps in fees and was up about 2.9% in the last five days.