ECB Rate Hike Priced In, Lagarde's Comments Will Set EUR's Next Move

The European Central Bank (ECB) is set to announce its interest rate decision on Thursday at 12:15 GMT, and most market participants expect a 25 basis point hike to 2.5%.

This move comes as Eurozone inflation accelerated to 3.3% year-over-year in August, up from 2.9% in July, with core inflation falling to 2.4% from 2.5%. Energy prices, however, jumped significantly, reaching 14.3%.

The market is pricing in nearly two additional rate increases over the next 12 months, with one potentially as soon as December and a second in Q2 or Q3 of next year.

ECB President Lagarde's comments will be crucial in determining the EUR's next move. A hawkish tone could lead to further tightening, while a more dovish approach might keep rates stable for the remainder of this year.