06:22 AM EDT, 05/09/2025 (MT Newswires) -- For most of the past couple of weeks, EUR/USD buyers emerged "vehemently" in the 1.1250-1.1300 area, said ING.

The break lower seen on Thursday is telling, wrote the bank in a note. Markets have turned tentatively more optimistic on the US dollar thanks to United States President Donald Trump's reinforced hopes of upcoming trade deals and seemingly greater attention to market indications.

This is still a far cry from the "pragmatic" version of Trump that markets were pricing in as the baseline on Inauguration Day, but it's enough to prevent growth and debt-related bearish bets on the US dollar from mounting, stated ING. There are reasonable doubts about markets' readiness to rebuild strategic US dollar positions just yet, and time might be needed to reinstall market confidence in the US dollar as a safe-haven asset.

At the same time, EUR/USD remains overvalued by 2% in the short term according to the bank's estimates, and more indications that Trump has switched to a market-pleasing mode can force more trimming of the risk premium.

Friday, the eurozone calendar doesn't offer much. Investors will see whether EUR/USD starts to form a new support floor at 1.1200; a break lower would signal a marked shift in sentiment on the pair and potentially pave the way for larger corrections, with 1.100 being the next big support.

Sterling strengthened on Thursday as the Bank of England sent hawkish signals while at the same time cutting rates by 25bps, pointed out ING. The announcement of the United Kingdom-U.S. trade deal later Thursday added some support to sterling, but that proved to be short-lived.

The deal had already been largely priced in, and the implications for the U.K. economy aren't significant, added the bank. That said, the U.K. has now signed trade deals with India and the U.S. in quick succession and that is keeping markets hopeful on trade talks with the European Union. An eventual deal with the bloc would have much more meaningful implications for the U.K. and might lend a hand to troubled British finances.

When it comes to the BoE, the hawkish surprises came both from the vote split and the details in the statement, according to ING. There were four dissenters to the 25bps decision, two voting for a 50bps reduction and two for a hold.

In the hawkish camp were Catherine Mann, a long-time hawk who had -- very surprisingly -- voted for a 50bps cut earlier this year, and most importantly, Huw Pill, the BoE's chief economist. That resounded more with markets than the two 50bps cut votes, as the statement also seemed to lean on the cautious side.

The guidance is unchanged, with further easing steps still set to be "gradual and careful," and growth forecasts weren't revised lower as some had expected. ING expects two more cuts this year, in August and November.

The proximity to the May19 EU-U.K. summit can keep markets on the bearish side of EUR/GBP. Calmer risk sentiment and positioning imbalances -- the euro (EUR) is more overbought than GBP -- should also keep the pair pressured, added the bank. A test of the big 0.840 support -- where 100-day and 200-day moving averages converge -- is a tangible possibility in the coming weeks.

The zloty (PLN) rallied after Poland's central bank (NBP) press conference on THursday, but the rates differential suggests more of a level around 4.260 EUR/PLN, noted ING. Markets are likely to hear from more council members in the coming days, which will set the market's next direction.

The Czech Republic is back after the holidays, and Thursday's sell-off in core rates suggests some upside for the koruna (CZK) rates on Friday, which should keep EUR/CZK below 25.000 despite a rather dovish Czech central bank on Wednesday compared with market expectations.

EUR/RON closed on Thursday unchanged for the first time in two days despite some intra-day volatility. Forward implied yields also fell a bit, but ING thinks it's too early to see any significant calming in Romania's leu (RON). Still, we have some events on the table in the coming days that will determine the next direction, and EUR/RON spot and forwards have upside risk from current levels in the bank's view.