06:01 AM EDT, 08/15/2025 (MT Newswires) -- Friday's meeting between United States President Donald Trump and Russian President Vladimir Putin in Alaska and any better clarity on the path ahead in the Russia-Ukraine conflict have longer-lasting implications for the euro than for the US dollar, said ING.

How EUR/USD, EUR/CHF and EUR/JPY trade on Monday will be a good gauge of how markets have digested any headlines from Alaska, wrote the bank in a note.

The deterioration in the eurozone's terms of trade has impacted the long-term euro fair value, and some conviction that energy prices could come structurally lower from here could make markets more comfortable with the euro trading at levels inconsistent with a relatively unattractive implied rate -- in other words, above 1.20.

There is a chance that Friday might be the first step in the direction of de-escalation, and markets may tread carefully for now, stated ING. The repricing in the Federal Reserve cut expectations is hindering the chances of another major leg higher. The next U.S. data releases will determine whether a return to 1.180 is feasible in the near future.

Given how Central and Eastern European (CEE) foreign exchange has moved, markets are already pricing in some probability of progress, which makes the risk event more complicated, especially for EUR/HUF, which remains close to 11-month lows, added the bank.

In EUR/PLN and EUR/CZK, the risk should be more symmetrical, pointed out ING. Given the complicated estimate of Friday's Alaska outcome, it can be assumed that markets will reduce their exposure to CEE, and given the already long positioning in the region, profit taking wouldn't be surprising.

The outcome of the Alaska negotiations should come after CEE trading hours, so investors will have to wait until Monday's opening for the market reaction.

During a press conference on Thursday to present its new inflation report, the Central Bank of Turkey (CBT) announced several changes to its monetary policy framework. Expected inflation for the end of the year remains at 24%, and 16% for 2026, below ING's forecast of 29.5% and 19.4%, respectively.

The CBT will now announce an interim inflation target in its inflation reports, which is set at 24% and 16% for the end of this year, the same as its inflation forecast. This may cause some market misinterpretation, but on the other hand, it should better indicate the central bank's stance since it could differ in the future.

For foreign exchange, the story here doesn't change much, according to ING. Although CBT rate cuts should reduce the attractiveness of lira (TRY) carry trades, we are still in a safe zone for now, and at least this year, this shouldn't be a problem.

At the same time, it seems that the CBT has its foreign exchange policy fully under control and isn't considering any changes here, at least in the short term. The bank believes that, at least through the summer months, USD/TRY will continue to grind gradually higher, while still offering a generous currency carry for long TRY positions, which remains ING's favorite currency play.