06:01 AM EST, 12/13/2024 (MT Newswires) -- EUR/USD was largely unchanged on Thursday's European Central Bank event risk despite President Christine Lagarde not sounding extremely dovish, with a slightly weaker euro only at the end of the trading session, said ING.

The direction of travel is lower for eurozone rates and rates won't necessarily stop at neutral -- 2.00%-2.25%, wrote the bank in a note. Some might point out the sell-off in eurozone bond markets and especially the widening of the Italian:German sovereign spread.

Yet this spread had been exceptionally tight and the widening looks profit taking/position adjustment rather than any view that the ECB is blind to the looming eurozone slowdown, stated ING.

EUR/USD largely remains glued to 1.05 and the bank doubts it needs to stray too far from that level on Friday. Next Wednesday's United States FOMC meeting is probably the next big test of the US dollar now and ING very much doubts those short EUR/USD will need to cut what is a carry-positive position. 1.0450-1.0550 may prove the extremes of the short-term range.

Elsewhere, the Swiss central bank (SNB) did go for the more aggressive 50bps rate cut option, noted ING. New SNB President, Martin Schlegel, was honest in saying the SNB doesn't like negative rates but is prepared to use them if necessary.

The bank isn't yet fully subscribed to the SNB negative rate story next year but in any case, maintains the position that the SNB won't be able to cut as deeply as the ECB and that EUR/CHF will trend lower.

The end of the week should be rather quiet for Central and Eastern European foreign exchange and process the impact of Thursday's ECB meeting, according to ING. Some upward repricing in EUR rates triggered a similar effect in the Polish zloty (PLN) and Czech koruna (CZK) markets, resulting in essentially unchanged rate differentials.

At the same time, a slightly lower EUR/USD should have a negative impact on foreign exchange, added the bank. On the other hand, PLN and CZK have been rather disconnected from the global story recently and following more of a rate differential, which would imply a rather muted impact on foreign exchange unless markets see more repricing in rates on Friday.