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Researchers at investment bank TD Securities have released a 'cheat sheet' that offers some insights into potential targets for the Euro-Dollar exchange rate (EURUSD) on the various outcomes likely to emerge from the European Central Bank's interest rate decision.

The market is split on whether the central bank will hike or keep rates unchanged, reflecting the conflicting signals posed by still-high inflation and a rapidly slowing economy.

"It is a very close call, but we believe a hold is slightly more likely than another hike. The language will likely remain open-ended around further hikes, with a focus on data dependence keeping all options on the table for the next couple of meetings," says TD Securities in a note to clients.

Strategists see a 50% chance of a 'hawkish' hold, whereby the ECB keeps interest rates unchanged but the language in the press statement remains similar to July in which data dependence is still key and all options are on the table for October.

Furthermore, ECB President Christine Lagarde strikes a similar tone to that of July in her press conference and reiterates that future decisions will be a function of the data.

Lagarde would also be careful to emphasise that further hikes are very much possible, but not guaranteed.

Under such an outcome the EURUSD is seen rising by 0.25%.

A 'hawkish' scenario is seen as 45% likely and involves the ECB hiking 25 basis points but adopting slightly softer language in the press statement.

Without being explicit, the ECB would ultimately be signalling that it is not certain if further hikes are needed this cycle.

"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," explains TD Securities.

Here, the EURUSD is seen going 0.50% higher on the day.

A 'dovish' scenario is least likely and is given a 5% likelihood. Here, the ECB holds interest rates unchanged and softens the language slightly in the press statement, suggesting that there is a high bar for hikes to resume.

President Lagarde would reiterate the need to remain data-dependent in her press conference but suggest substantial upside surprises are needed to result in another hike.

She would put more emphasis on deteriorating growth conditions and argue the ECB wants to avoid the risk of over-tightening.

Under such a scenario the EURUSD is seen falling 0.60%.