06:16 AM EST, 02/12/2025 (MT Newswires) -- ING notes that periods of rotation into eurozone equities can help the euro since equity investments are largely non-foreign exchange hedged.

The bank recalls 2017 when relief after the French and Dutch elections prompted a major rerating of eurozone equities and the euro.

Frankly, it's hard to see such optimism coming through for the euro today, states ING. Growth remains poor, the fiscal cavalry remains in its barracks and the European Central Bank may well be cutting by another 100bps this year to keep rate spreads wide.

That is why, if the bank sees any short-term recovery in EUR/USD to say the 1.0450 area, it may well peter out there.

Elsewhere ING points out the recovery in EUR/CHF. Again the Russia-Ukraine war story may be playing a role given that EUR/CHF was trading above 1.05 before Russia invaded Ukraine.

A softer Swiss inflation print today and the prospect of even lower inflation next quarter -- the Swiss central bank forecasts the annual rate dropping to 0.2% -- warns that upside risks to EUR/CHF may be growing. ING could see 0.9500/9520 this week as investors reprice for some positive Ukraine news out of this weekend's Munich security conference.

After last week's January inflation, ING turned its bearish view on the Czech Republic's koruna (CZK) to neutral, which seems like a good decision from today's perspective.

Higher-than-expected inflation won't allow the Czech central bank (CNB) to cut rates faster, while the whole Central and Eastern Europe region is gaining under the positive sentiment from the beginning of the Ukraine deal discussions.

As a consequence, EUR/CZK is likely to stay in the 25.000-250 range for longer, added the bank.