06:12 AM EDT, 09/20/2024 (MT Newswires) -- Having bounced around on Thursday's United States initial claims data, EUR/USD is back near the recent highs at 1.1180, noted ING.

This looks to be a function of a broad move in the US dollar, wrote the bank in a note. However, EUR/USD looks to be on the verge of breaking out of a low volatility range. For example, a weekly close above 1.1160 warns of a sizable upside breakout.

At this stage in the U.S. cycle, ING believes an upside EUR/USD breakout is possible.

There seem to be no immediate catalysts for that upside breakout on Friday given the lack of U.S. data and only second-tier eurozone releases, stated the bank. It will look out for a speech from European Central Bank President Christine Lagarde at 5 p.m. CET on Friday.

Financial markets still have 6bps of an October ECB cut priced in -- which should come out of the market at some point, pointed out ING. A 1.1150-1.1200 EUR/USD range may well be seen on Friday, though the bank retains an upside bias.

Elsewhere, EUR/CHF is moving higher, added ING. A better risk environment may be helping -- but so too is USD/CHF. Here, USD/CHF seems to spike higher every time it drops below 0.8400.

Whether that is a commercial or Swiss central bank flow is hard to say. ING wouldn't chase EUR/CHF higher, however, since the SNB may not deliver on all of the dovishness priced into next week's policy meeting.

Sterling's rally on Thursday's Bank of England communication looks fully justified, according to ING. United Kingdom short-dated yields rose relative to their eurozone counterparts as the BoE stuck to the new script of 'gradual' easing.

The BoE does genuinely seem to be questioning whether inflation will come down as much as elsewhere in the world and continues to present three scenarios. The BoE certainly doesn't seem to be in the U.S. Federal Reserve camp of signaling the 'all-clear' on inflation.

The bank expects the BoE to come around to the Fed's way of thinking. That may take some time, however, and in the meantime, sterling can continue to do well.

As a consequence, it's hard to rule out GBP/USD making a push to the 1.35 area, while EUR/GBP could extend to 0.8340. August UK retail sales have helped sterling Friday, but leading indicators for consumer confidence warn that consumers are starting to become fearful of the Oct. 30 UK budget.

A currency preparing for next week's central bank meeting is the Czech koruna (CZK), which has been enjoying stronger values in recent days and is slowly approaching 25.00 per euro, added ING. Market pricing is still on the very dovish side, but given the core story, it makes no sense to go against the received market.

On the other hand, still, the Czech central bank meeting should be reasonably hawkish and CZK should benefit the most from it. As a consequence, the bank still finds the CZK attractive for the days ahead, when markets should test 25.00 EUR/CZK.