Euro Gains as ECB Rate Hike Looms, US Inflation Data Awaited

The Euro (EUR) has continued its upward trend against the US Dollar (USD), reaching near 1.1630 during early Asian trading hours on Wednesday. This gain is largely due to expectations of a rate hike from the European Central Bank (ECB), with ECB President Christine Lagarde set to speak later in the day.

The ECB's September policy meeting on Thursday is widely anticipated to result in a 25 basis point increase to 2.5%, driven by surging energy prices due to the ongoing US-Iran conflict. Eurozone inflation rose back above 3% in August, with ING's global head of macro Carsten Brzeski stating 'we expect the ECB to hike rates by 25 basis points. Another insurance rate hike.' He added, 'or for those who don't like this term: a dovish rate hike.'

Traders are also keeping an eye on upcoming US inflation data, specifically the Producer Price Index (PPI) and Consumer Price Index (CPI), due later in the week. Stronger-than-expected readings could lift the Greenback and pose a headwind for the EUR/USD pair.