06:08 AM EDT, 05/06/2025 (MT Newswires) -- There are no major macroeconomic data releases in the eurozone calendar this week, moving the focus instead to European Central Bank speakers, said ING.

Tuesday, ECB "arch-dove" Fabio Panetta speaks at an event in Asia. However, the ECB out-of-meeting commentary hasn't added too much color of late, as a generally dovish narrative continues to persist, and there has been little pushback against market speculation for rates to fall close to 1.50% from the current 2.25%, wrote the bank in a note to clients.

The majority of EUR/USD moves still depend on market sentiment on USD-denominated assets, state ING. Should a broader unwinding of US dollar positions or a sharper increase in USD hedging demand in USD-rich Asian countries materialize in the coming days, the euro and the yen (JPY) probably stand to receive another round of reserve-related inflows.

A stronger euro due to factors unrelated to short-term rates will likely argue for even more cuts by the ECB, whose estimates in March included a material negative impact of an appreciation in EUR/USD on the eurozone's output, pointed out the bank. The dislocation between foreign exchange and short-term rate differentials, however doesn't tend to last too long, and in this case would need to be fueled by further unwinding of USD reserve positions.

If that doesn't happen, the overbought and overvalued EUR remains at risk of more downside pressure, noted ING. The 1.130 level remains the anchor in EUR/USD -- a decisive break lower can see the 1.120 support being cleared soon.

EUR/GBP seems to be attracting buyers around the 0.850 level and is awaiting another clear-cut sterling bullish catalyst for a break lower. Plans to improve the United Kingdom-European Union trade relationship have unlocked some upside for GBP, although markets may now be awaiting some more tangible developments before building more sterling longs, noted the bank.

In domestic U.K. events, Thursday should see the Bank of England cutting rates by 25bps, predicted ING. This is widely expected by consensus. The bank expects an 8-1 vote split -- one vote for a 50bps cut -- and no changes in forward guidance (future cuts to be "gradual and careful").

The bank thinks EUR/GBP may stabilize around 0.850 for now as a well-telegraphed BoE cut shouldn't trigger major moves. Ultimately, the euro's greater exposure to potential positioning adjustments means the risks remain skewed to the downside for EUR/GBP.

Although the global story sees rapid swings, the Central and Eastern European (CEE) foreign exchange picture and ING's views remain relatively stable. The bank has been building a case for lower PLN/CZK for the last month. Although the pair has moved significantly in recent weeks, this week should be an additional catalyst.

ING estimates the Czech central bank (CNB) to be hawkish versus market pricing in both scenarios, which should support further koruna (CZK) gains below 24.900. On the other side, the Polish central bank (PNB) opening of the cutting cycle should pressure a weaker zloty (PLN), underperforming CEE peers.

The bank expects EUR/PLN to range 4.280-300 this week with the upper range testing if NBP confirms its dovish stance.