06:10 AM EDT, 06/25/2025 (MT Newswires) -- The EUR/USD rally stalled again in the 1.160-1.165 area and it's plausible markets may require a more compelling macro story -- most likely from the United States -- rather than the mere unwinding of geopolitical risks for a break higher, said ING.

A lot of focus in Europe is on the ongoing NATO summit in the Netherlands, which U.S. President Donald Trump joined late Tuesday, wrote the bank in a note. Any signs that the U.S. safety guarantees for European allies are faltering further -- or becoming even more transactional than expected -- could sour sentiment in European markets. Especially after Spain's refusal to meet the 5% defense spending target has curbed any enthusiasm for a coordinated spending boost.

That said, EUR/USD remains predominantly a US dollar story, and the market's blatant dislike of the greenback -- confirmed by limited gains during the Middle East turmoil -- means the upside potential remains intact, stated ING.

Central and Eastern European (CEE) currencies reacted positively on Tuesday to the announced ceasefire in the Middle East. In USD-crosses, all three major currencies in the region gained at least 1.0% this week alone and the bank can now see some stabilisation with more attention to the local story.

Wednesday's calendar is quiet in the CEE region and attention will be on the Czech central bank (CNB) meeting. It should support the koruna (CZK) with a hawkish tone, reacting to the growing upside inflation risks, pointed out the bank.

Similarly, Tuesday's meeting of Hungary's central bank (MNB) was hawkish according to ING's expectations, which accelerated forint (HUF) gains.

In general, the bank remains bullish on the region, but the next few days should be calmer unless the geopolitical situation changes again. While HUF and CZK have room for further gains, Poland's zloty (PLN) may hit some limits. Tuesday's data brought another wave of PLN rate receivers, undermining the rate differential that made the bank bullish on the currency in previous days.

Overall, ING believes that EUR/HUF may test 400 in the coming days thanks to MNB support, EUR/PLN will be more limited on the downside at 4.250 levels.

The CNB will leave rates unchanged at 3.50% on Wednesday, in ING's view, in line with market expectations. The bank remains bullish on the CZK despite the rally over the past two days and it expects EUR/CZK to head towards 24.70 on Wednesday.