Economists at TD Securities discuss the European Central Bank (ECB) Interest Rate Decision and their implications for the EUR/USD pair.

Hawkish (45%): 25 bps hike and dovish guidance

25 bps hike with slightly softer language in the press statement. President Lagarde reiterates the importance of remaining data dependent, but softens her language around further hikes to imply that the bar is now higher for further hikes. EUR/USD +0.50%.

Base case (50%): Hawkish hold

The GC delivers a hold but the language in the press statement remains similar to July. President Lagarde keeps the communiqué similar to July and reiterates that future decisions will be a function of the data. EUR/USD +0.25%.

Dovish (5%): Dovish hold

The GC delivers a hold and softens the language slightly in the press statement, suggesting that there is a high bar for hikes to resume. President Lagarde reiterates the need to remain data dependent in making policy decisions but suggests substantial upside surprises are needed to result in another hike. EUR/USD -0.60%.