ECB decision could set a new direction for the euro exchange rate

On Thursday morning, September 10, the EUR/USD pair is trading in a narrow range of 1.1626-1.1641 dollars ahead of today's European Central Bank meeting.

At 15:15 Kyiv time, the ECB will announce its interest rate decision, after which at 15:45 ECB President Christine Lagarde will hold a press conference. The leadership's comments may prove to be at least as important for the market as the decision itself.

For the euro, a rate hike is a potentially positive factor: higher yields on European assets make the currency more attractive to investors. Therefore, if the ECB not only raises rates but also signals readiness to continue tightening monetary policy, the euro could gain additional support against the dollar.

If Lagarde signals that further rate hikes are possible due to persistent inflation risks, this could push the euro higher. Some financial institutions already anticipate another rate hike in December amid continued energy price growth.

However, if the ECB emphasizes that the hike is more of a one-off measure and further tightening could harm the eurozone economy, the euro's reaction may be limited or even negative. Most economists still expect the ECB to pause after the September rate hike.

The situation in the energy market will also influence the euro. Amid escalating geopolitical tensions in the Middle East, Brent crude has already exceeded $100 per barrel, heightening concerns about inflation in Europe.

Thus, today will be very important for EUR/USD. The ECB rate hike is already expected by the market, so the main driver of the euro's movement will be the signal about the regulator's future policy. Hawkish rhetoric could support the European currency and push EUR/USD toward 1.17 dollars, while a cautious ECB stance may limit the euro's upside potential.

Additional volatility today may come from US macroeconomic data, as investors simultaneously assess the Federal Reserve's future policy prospects. At 15:30, the producer price index and US unemployment data will be released. The market will await these data and will certainly react if they deviate significantly from forecasts.

Currency exchange rate forecast on the forum.