06:22 AM EDT, 07/28/2025 (MT Newswires) -- Investors welcomed the clarity provided by the United States-European Union trade deal over the weekend, said ING.

Whether this remains the final deal remains to be seen, but taken at face value, EU companies can now progress with some planning, wrote the bank in a note. This comes at a time when eurozone fundamentals aren't "that bad" -- high saving rates, lower inventories and the prospect of some powerful fiscal expansion.

The above probably supports EUR/USD at levels close to 1.20 by the end of the year, but ING's call on the next chapter is a corrective one. Here, the bank thinks Federal Reserve easing expectations can be scaled back over the coming months, but also that a 25bps rate cut from the European Central Bank in September is underpriced at just a 15% probability.

Eurozone data this week may support such a view, where second-quarter gross domestic product on Wednesday is expected to come in flat after a 0.6% advance in Q1. The eurozone July flash inflation print on Friday is expected to dip under 2.0%.

With a speculative market already reasonably long euros and a 2% per annum cost of carry against the US dollar to deal with, ING doesn't see the case for EUR/USD to immediately push through the highs at 1.1830. Instead, the bank has a bias for EUR/USD drifting below 1.1700 and perhaps all the way to 1.1600 if the Fed continues to resist pressure to cut rates this Wednesday.

EUR/GBP looks to be trading quite comfortably above April's spike high near 0.8735, according to ING. A move up to 0.88 isn't guaranteed, however, since this week's eurozone data could weigh a little on the euro.

At the same time, sitting long EUR/GBP in quiet August markets is again carry negative and a very light United Kingsom calendar this week looks unlikely to provide the incentives to add to short sterling (GBP) positions. Perhaps EUR/GBP can trade something like a 0.8700-0.8770 range this week.

GBP/USD looks more vulnerable. Here, ING favors a retest of decent support at 1.3370, below which losses can accelerate -- perhaps all the way to 1.3150 if the U.S. data/FOMC event risk this week is US dollar positive enough.

Markets continue to be dominated by U.S. trade headlines, which, after the weekend, indicate a risk-on mood. The bank already saw this on Friday in the Hungarian forint (HUF) and Czech koruna (CZK) trading, which reached their strongest levels against the euro since September and June 2024.

Both currencies are also supported by hawkish repricing, where the Polish zloty (PLN) is losing ground, added ING. Here, the rate differential has narrowed again to near May levels, when the central bank first cut rates.

Nothing should change here, and lower inflation figures should further support this trend. The bank remains bearish on PLN with 4.270-280 per EUR. EUR/CZK, on the other hand, should continue to grind lower thanks to support from hawkish central bank (CNB) comments this week.

HUF seems most mixed to ING at the moment, where weaker economic data supports more rate cuts, but markets are going in the opposite direction, and the currency is getting support from both higher market rates and positive global sentiment. As a consequence, the bank has to capitulate on its bearish view here.

Still, the coming weeks should be more locally focused with next week's inflation print, which could again cool market pricing and the strength of the HUF. At the same time, ING believes that positioning is already solidly long. In the short term, though, the bank may see further gains.