06:12 AM EDT, 04/01/2025 (MT Newswires) -- The euro has remained rather resilient to the whole United States tariff story, wrote ING in a note to clients.

Despite the European Union being among the biggest victims of this week's round of tariffs, European currencies are faring much better than China proxies or the Canadian dollar, with EUR/USD trading briefly below 1.080 on Monday before revering later in the session, noted ING.

What also may have helped the euro is a Bloomberg report suggesting that more European Central Bank officials are ready to accept a pause in April, stated ING. There is a possibility that the ECB tipped the media as policymakers were uncomfortable with markets pricing in over 20bps of easing for the April meeting early Monday.

The ECB probably wants to avoid a situation where it is led by market pricing to take a decision -- cut -- with the alternative -- hold -- being delivered a blow to an already turbulent bond market, pointed out the bank.

Anyway, the implied probability of a cut as of this morning is still high (74%). We'll see what the flash CPI report for March tells us today, but the indications were modestly dovish from Germany yesterday and the consensus is for a decline from 2.6% to 2.5% in core eurozone inflation.

Earlier Tuesday, eurozone inflation ticked down from 2.3% year to year to 2.2% in March. This wasn't just on lower energy prices, but also a pronounced decline in services inflation. Even though the latter is in part driven by a late Easter, the decline is a dovish sign for the ECB ahead of possible trade upsets to the inflation outlook, added ING.

Markets are already pricing in 100bps reactions this year at Poland's central bank (NBP), with the first cut of 50bps in July, according to ING. So markets are already in the bank's baseline scenario with more cuts early on.

Still, the rate cut proposal would have signalled importance to the markets, and ING can price in more cuts even if they are not delivered later. As a consequence, Wednesday's policy meeting creates downside for the zloty (PLN).

Monday's contradictory direction of PLN rates versus the EUR already points to a weaker currency, in part due to hawkish headlines from the ECB. As a consequence, ING looks above 4.20 EUR/PLN.