06:05 AM EDT, 03/26/2026 (MT Newswires) -- EUR/USD eased back below 1.16 Wednesday despite good risk sentiment, which could be mirroring some profit-taking on the de-escalation trade, said ING.

At the same time, EUR/USD did jump on the European Central Bank's surprise hawkishness last week, and may be giving up some of those gains as the dovish repricing in ECB expectations proves steeper than for the Federal Reserve when oil prices decline, stated ING.

Markets have notably scaled back expectations for an April ECB hike, which was priced at a peak 22bps on Monday and is now at 17bps after having fallen to 14bps -- closely tracking oil prices, wrote the bank in a note to clients.

On Wednesday, ECB President Christine Lagarde said the central bank wouldn't be paralyzed by hesitation, but investors also heard some slight dissent from dovish member Francois Villeroy de Galhau, who stressed it's too early to discuss the timing of hikes.

Any extra day without tangible de-escalation in the Gulf dents the sustainability of the latest EUR/USD rally and argues for a return below 1.150, added the bank. No key data to watch in the eurozone on Thursday, but the ECB's Vice President Luis de Guindos and Governing Council member Madis Muller are due to speak.

Investors will hear from three Bank of England policymakers on Thursday: Sarah Breeden, Alan Taylor and Megan Greene. Greene already spoke on Wednesday and reiterated her inflation concerns and hawkish spin. Breeden claimed she would have voted for a cut at last week's meeting if it wasn't for the energy price spikes, but was generally hawkish too. ING wants to see if signs of potential de-escalation make her turn slightly more dovish.

Taylor was the only dove who stayed dovish last week, arguing that the implications for medium-term inflation from temporary energy shocks aren't significant and the bar for hikes is high. But more dovish comments from him won't come as a surprise to markets, according to the bank.

ING still sees some upside risks for EUR/GBP due to the larger room for dovish repricing in a de-escalation scenario for sterling (GBP) curve. A move past 0.870 in the coming weeks remains the bank's baseline.