06:05 AM EDT, 03/10/2025 (MT Newswires) -- EUR/USD is consolidating after last week's 4.4% rally, said ING.

The bank hasn't seen anything like that since the early days of the COVID-19 pandemic in March 2020. The narrative of independent United States and European stories stands to lift foreign exchange volatility.

Away from the Russia-Ukraine peace discussions in Saudi Arabia this week, the focus will be on German CDU leader Friedrich Merz and his ability to build a coalition of the fiscal willing to get the 500 billion infrastructure fund through the current parliament.

Merz is currently in discussions with the Greens and reports suggest a vote could take place in the lower house Bundestag on March 18, before the upper house Bundesrat seals the deal on the 21. Headlines on whether the Greens are playing ball this week could trigger some volatility in the euro, stated ING.

On Monday, the March Sentix Investor confidence survey will be released. With little other data this week, the focus will be back on European Central Bank speakers. ING's call is that the ECB will pause its easing cycle in April.

However, markets still price 17bps of rate cuts for that meeting. ING expects the doves and hawks to do battle in the press over the need for an April cut, with Monday's input coming from the hawkish Joachim Nagel in a speech at 2 p.m. CET Monday.

The bank favors a little EUR/USD consolidation in the 1.0770-1.0850 area at the start of the week and suspects that another leg higher will have to come from ECB speakers or significant progress in Saudi Arabia rather than the U.S. macroeconomic/rate side.

GBP/USD has been dragged higher by the fiscal re-rating of Europe, according to the bank. That hasn't had too much impact on the pricing of the Bank of England easing cycle this year, where markets continue to price around a further 50bps-60bp of rate cuts.

The next big local inputs to the United Kingdom story come at the March 20 BoE meeting -- no change expected -- and the