• Euro lurches higher on increased odds of ECB rate hike.
• Euro rate call slated for Thursday, leaked memo implies increased inflation expectations from the ECB.
• US CPI reading still in the barrel for Wednesday, promises refreshed market momentum.

The EUR/USD pairing has punched higher in Tuesday’s late trading session, bolstered by reports that the European Central Bank (ECB) has internally raised its inflation forecasts ahead of the ECB’s rate announcement later this week.

Read more: ECB to hike inflation forecasts, Euro surges

The Euro (EUR) pushed higher on the headlines, tapping the 1.0765 region, and now sits poised to close out Tuesday’s markets in the green for the day.

Market participants have been mixed on ECB expectations in recent days, with about 40% of investors anticipating a rate hike at the next ECB rate meeting on Thursday. However, if the still-unconfirmed ECB leak proves valid, it could very well see the EU central bank peg in another rate hike this week. 

The news wasn’t enough to reclaim Tuesday’s early high of 1.0769, but markets in Asia could see an extended reaction as they kick off the Wednesday trading session.

Meanwhile, the Greenback (USD) side of the EUR/USD sees investors waiting for Wednesday’s US Consumer Price Index (CPI) figures, where market forecasts are anticipating an increase in headline US inflation to 0.6% for the month of August, an uptick from the previous month’s showing of 0.2%. With inflation expectations on the high side for the US, the EUR/USD is set to duke it out over competing rate hike cycles from the Federal Reserve (Fed) and the ECB