06:18 AM EDT, 06/20/2025 (MT Newswires) -- EUR/USD is back above 1.150 as markets priced out a certain degree of geopolitical risk off the pair, said ING.

The situation in the Middle East remains too volatile to make a strong directional call on the pair, but the overarching risk of the United States joining the conflict could keep it from aggressively retesting 1.160 in the next few days, wrote the bank in a note.

Eurozone developments remain very marginal for EUR/USD at this stage, with the macro calendar incidentally offering very little input, stated ING. The EUR/USD two-year swap rate spread has incidentally been quite stable around 165-170bps since the European Central Bank meeting.

Elsewhere in Europe, markets were taken completely by surprise by Norges Bank's 25bps rate cut on Thursday in Norway. ING argued last week that the conditions for a cut were ideal, and that holding again was a risky move.

However, ING had doubts that the Norwegian central bank would completely wrongfoot market expectations and consensus. The bank now expects two more cuts by Norges Bank, which doesn't necessarily prevent further EUR/NOK gradual depreciation.

Sterling was only lightly touched by a consensus Bank of England hold on Thursday, added ING. The lack of new guidance has been the norm in the latest BoE meetings, and the vote split tends to be one of the very few metrics of hawkish-dovish tendencies.

Thursday's 6-3 vote split for a cut can be interpreted marginally on the dovish side and is allowing markets to reinforce their conviction call on a BoE August cut, pointed out the bank.

ING only expects two cuts this year two cuts this year, but markets may be tempted on the dovish side by soft United Kingdom data, and the bank remains generally bullish in EUR/GBP in its multi-month view.

Central and Eastern European (CEE) rates were paid on Thursday and ING thinks Poland's zloty (PLN) market should follow suit, supporting the bank's view of a stronger zloty. The global story and geopolitics will now play a major role, but ING believes the potential sell-off in CEE foreign exchange is a fade given that the likely outcome is higher inflation stemming from rising energy prices and a more hawkish stance from regional central banks.

The bank favors selling spikes in EUR-crosses in the CEE region over the coming days.