06:17 AM EST, 12/09/2024 (MT Newswires) -- Friday's United States jobs report wasn't weak enough for EUR/USD to sustain a move over 1.06, although ING noted that rate spreads have become a little more supportive for EUR/USD.

The highlight this week will be Thursday's European Central Bank meeting. ING estimates that a 25bps cut is probably more likely now, although the press conference could potentially open the door to sub-neutral -- less than 2.00% -- policy rates next year.

There appear to be few reasons for the ECB to be cheerful right now, even though the hard data is holding up better than expected, wrote the bank in a note.

For Monday, the eurozone data calendar only holds the Sentix Investor Survey and the Eurogroup meeting of finance ministers, where presumably the battle of budget austerity versus the pressing need for fiscal support will be hotly discussed.

After heavy losses in October and November, EUR/USD has since enjoyed two weeks of consolidation. It now looks like time for the bear trend to get going again, stated ING.

Despite seasonal trends which are normally EUR/USD supportive in December, the bank favors EUR/USD drifting back to 1.0500/0520 short-term and potentially breaking lower in the week should U.S. consumer price data or the ECB meeting have something for EUR/USD bears like ING.

Thursday, the Swiss central bank (SNB) will likely be cutting rates a few hours before the ECB. ING is a little surprised to see markets pricing 36bps for the SNB decision.

ING thinks a 25bps cut is far more likely than 50bps given that, with the Swiss policy rate already at 1.00%, the SNB has far less room for conventional policy easing. Indeed, there is a case that the SNB doesn't take rates below 0.50% in this cycle -- even though market pricing is toying with the idea of negative rates next year.

Having stayed surprisingly steady during French political stress last week, EUR/CHF is now turning a little lower. Here the bank favors a grind lower towards this year's spike lows near 0.9200/9210 as it becomes apparent the SNB won't be able to keep pace with ECB easing.

In markets last week ING saw more divergence between Poland's zloty (PLN) and the Czech Republic's (CZK) on one side and Huingary's forint (HUF) on the other. The hawkish central banks have added support to the PLN and CZK, and this part of the Central and Eastern European (CEE) region is visibly focusing on the local story and rates path.

The forint, on the other hand, remains mainly led by EUR/USD -- the global story. The bank believes EUR/HUF is better priced than EUR/PLN and EUR/CZK, but it doesn't see any change here until at least the end of the year.

However, ING still thinks the global story will prevail and the weakness in the eurozone and lower EUR/USD will push CEE currencies weaker later. However, in the short term, the bank sees PLN and CZK maintaining support due to wider rate differentials, while HUF should get some support after Friday's rating outlook upgrade by Fitch.