06:06 AM EST, 01/22/2025 (MT Newswires) -- For a second day, EUR/USD got support from a US dollar decline but fell short of the 1.0440 mark, said ING.

There still seems to be some resistance to take the pair back to 1.0450-1.050, which would close the gap with its short-term fair value, which the bank currently estimates at 1.0580. In fact, 1.050 would mark a shift to essentially pricing out most of the United States President Donald Trump's tariff risk on the eurozone.

That is probably premature, stated ING.

On domestic eurozone news, several European Central Bank members are speaking in Davos, including President Christine Lagarde, Francois Villeroy, Klaas Knot and Olli Rehn. Yesteon

Tuesday, Bundesbank Governor Joachim Nagel confirmed the ECB should cut rates by 25bps next week and reiterated the widely shared view that more cuts can follow. Nagel is generally considered among the most hawkish Governing Council members, and that was another signal there is no resistance left to the dovish front, wrote the bank in a note.

ING expects Wednesday's comments to follow the same line and markets to consolidate their expectations for four rate cuts by the ECB this year.

Central and Eastern European foreign exchanges had another good day on Tuesday, with the Czech Republic's koruna (CZK) outperforming its peers this time, added the bank. EUR/CZK erased most of the gains after surprisingly low inflation last week and closed below 25.150, well below the Czech central bank's (CNB) forecast.

Investors could hear from central bankers later this week ahead of the start of the blackout period on Thursday next week. ING expects a dovish tone due to lower inflation, which should again push EUR/CZK higher. The current low levels could be attractive to the market ahead of the CNB meeting in February, where the bank expects a rate cut.

Still, valuations point to a higher EUR/CZK around 25.350-400. As a consequence, ING sees the current move as noise from the global environment and remains negative on the CZK.

EUR/PLN successfully closed on Tuesday below the key 4.250 level. Contrary to the CNB story, Poland's central bank (NBP) hawkishness should keep the zloty (PLN) supported, according to ING.

While the bank still sees some dispersion between rates and foreign exchange here, it estimates current levels "more fair" compared with EUR/CZK. On the other hand, for a bigger move further down ING would likely need to see more hawkish repricing in the rates market.

Meanwhile, markets have resisted outpricing more cuts after the NBP press conference last week.