It is a close call, but we expect a 25 bps hike by the ECB. 

Markets are pricing in a 65% implied probability of a hike, so EUR/USD should rise after the announcement if we are right. However, a full 25 bps are factored in by year-end, and it will be hard for Lagarde to convince markets the ECB can push rates even higher. 

Any EUR rally may be short-lived. We expect a EUR/USD post-meeting jump to stall around 1.0800/1.0830 (if not falling short of those levels), and gradually give up gains as the Dollar’s momentum remains solid.