06:22 AM EDT, 07/07/2025 (MT Newswires) -- It wouldn't be a complete surprise to hear the White House threatening the European Union with broad 50% tariffs, with a comment such as "there is nothing they can do to avoid these tariffs," said ING.

Financial markets have learned, however, not to take these comments at face value and any EUR/USD dip on such a headline would likely meet buyers, wrote the bank in a note to clients.

As for the EU's negotiating position, reports suggest the bloc is split, pointed out ING. Apparently, Germany and countries within its auto supply chain network are looking for a quick deal to generate some certainty. On the other hand, France and Spain are said to prefer a tough negotiating stance and retaliatory measures.

Reports of a two-month extension for a deal to be made seem quite credible, too, stated the bank.

In terms of sectors, the EU is also trying to negotiate down 50% tariffs on steel and aluminium, 25% on cars and avoid a big tariff on the pharma sector, which would hit Ireland particularly hard. News on Friday that the United States is close to reaching a deal on pharma with Switzerland lifted healthcare stocks and could be a positive here.

It's hard to expect another big EUR/USD rally on this week's trade news, noted ING. There is an outside risk to the 1.1900/1910 area if the U.S. misjudges the mood and equities are marked heavily lower. But that seems unlikely.

The bank tends to favor consolidation in a 1.1700-1.1830 range this week, although again, ING would avoid trying to pick a top in EUR/USD.

The eurozone data calendar is also light this week. In terms of political news, this Friday's passage in the German upper house of nearly 50 billion euros in fiscal stimulus could be a reminder of the sea-change for domestic demand prospects in Europe -- a multi-year EUR/USD positive, added the bank.

EUR/GBP is staying relatively bid even as stress in the United Kingdom Gilt market abates. The fall-out from last week's U-turn on welfare reform is a broader understanding that taxes are going to have to go up in November, according to ING. The weaker sterling (GBP) story then switches from a sovereign risk premium story to a more conventional one of tighter fiscal and looser monetary policy.

Some slightly better U.K. monthly gross domestic product data this Friday could generate some sterling support, but the bank suspects 0.8600 now proves the near-term floor for EUR/GBP.

Last week, investors saw an "earthquake" shake market expectations in Poland, and the zloty (PLN) will remain in the spotlight this week, said ING. The dovish turn of Poland's central bank continues to drive the market, and market expectations have moved to 3.50% for the priced terminal rate.

EUR/PLN lags "significantly" with the movement in rates, and this week the bank expects this gap to close. The rate differential points to levels around 4.280-290. It will, however, take some time to get there, in ING's opinion.

Elsewhere, the bank remains bullish on the Czech koruna (CZK), while ING is neutral on the Hungarian forint (HUF), which it believes has rallied sufficiently for now. Of course, the focus will be mainly on the U.S. trade story and Wednesday's tariff deadlines.

In general, however, Central and Eastern European currencies shouldn't be the main ones exposed and the shield from a stronger EUR should protect the region from a possible risk-off sentiment, it added.