06:13 AM EDT, 05/02/2025 (MT Newswires) -- Eurozone inflation remains stable at just above 2%, said ING on Friday after the release of the data.

"Surprisingly dull," in fact, given the turmoil that the global economy is currently in, wrote the bank in a note. Down from 2.5% year-over-year in January to 2.2% in April, inflation is on track towards the European Central Bank's target, which justifies a continued careful easing of the monetary policy stance.

Earlier this week, ING thought the euro was losing its shine, and a couple of additional soft EUR/USD sessions have further convinced the bank that the return to more normal conditions in United States asset markets could continue to weigh on the pair.

The 1.13 area remains important for EUR/USD, stated ING. A decisive break lower may need to wait for markets to digest some soft -- but not alarming -- U.S. payroll figures later Friday. Still, ING believes the risks are skewed to 1.11 rather than 1.15 in the coming weeks.

EUR/GBP has corrected 2.5% from its April 11 peak, pointed out the bank. This is both a consequence of safe-haven long EUR positions being lifted and some idiosyncratic sterling strength. The latter seems to be related to expectations of an improvement in United Kingdom-European Union relations.

The British government is prioritizing a reset in EU economic relations, with the aim of convincing the Office for Budget Responsibility to upgrade its medium-term growth forecasts and unlocking more fiscal headroom, added ING.

Both sides meet on May 19, and though talks are initially centered on defense, closer regulatory alignment may emerge over the coming months. Though the economic impact may not be huge, positive headlines over the coming weeks might prompt a bit of a hawkish repricing of Bank of England expectations, given there are now three cuts priced over the next four meetings.

When adding that the euro remains most at risk from a rotation back to the US dollar, EUR/GBP looks vulnerable. The bank estimates the near-term fair value for the pair is currently 0.842 and ING expects a decisive break below the 0.850 level in the coming days.

ING's favorite currency in the Eastern and Central European region is still the Czech koruna (CZK), which should benefit from Wednesday's move up in market rates and help EUR/CZK go below 24.900. On the flip side, after EUR/PLN returned to the 4.280-300 range, the bank sees it as fair value for now, while next week may bring more weakness to the zloty (PLN).