06:13 AM EDT, 03/21/2025 (MT Newswires) -- European Central Bank President Christine Lagarde stuck to a strictly neutral tone in her European Parliament speech on Thursday, said ING.

It's admittedly hard to ask for anything different than rigorous data dependency at a time where uncertainty on the tariff impact is paired with uncertainty about fiscal stimulus implications. In other words, don't expect any ECB guidance before data has already set the direction for the euro, wrote the bank in a note to clients.

For the time being, the unwinding of the EUR/USD rally is matching ING's call, even if perhaps slightly earlier than the bank would have thought. Again, noise risk is elevated, but ING's preference in terms of multi-week directions is still down for the pair. A two-year swap rate differential around the current -150bps would still be consistent with EUR/USD at 1.07.

There is a light calendar Friday in the eurozone and no ECB speakers the bank, pointed out. The next major support for EUR/USD is probably the 1.0725 200-day moving average, which is now the key benchmark for a return to a bullish mood on the US dollar (USD).

Elsewhere in Europe, ING saw Sweden's Riksbank keeping rates on hold and the Swiss central bank (SNB) cutting another 25bps Thursday. On the former, markets had already anticipated that rates had reached the bottom and the krona (SEK) was only marginally moved. EUR/SEK remains cheap according to the bank's short-term fair value model and it continues to favor a rebound to the 11.10-11.20 mark over the coming weeks.

In Switzerland, another SNB cut brought the policy rate to 0.25%. The accompanying statement left all options open, but ING notes how, for the first time in a long time, the SNB hasn't had to revise its inflation projections lower. ING expects a hold in June and leans towards calling for the end of the easing cycle altogether.

The Swiss franc (CHF) dropped on the announcement, but EUR/CHF doesn't seem to have much bullish steam. Any further rallies should anyway fall short of breaking above 0.970 and ING's bias for Q2 remains a return to 0.950.

The sterling (GBP) curve saw a minor 5bps hawkish repricing after the Bank of England's consensus hold on Thursday, stated ING. There were two noteworthy aspects of the meeting: firstly, Catherine Mann has rapidly abandoned the dovish camp, leaving only one member voting against a hold, and secondly, the bank saw some reference to the fact that should data show greater job market instability, the BoE can draw disinflation-related conclusions and cut rates faster.

ING's call is unchanged -- three cuts this year -- but data uncertainty remains elevated. The United Kingdom is about to face the combined impact of the announced hike in corporate taxes, United States tariffs and a likely spending squeeze to be announced next week.

The balance of risks looks tilted to the downside for growth -- and intuitively for front-end GBP rates -- but inflation has remained too sticky so far, and the Sonia pricing has remained understandably "cautious."

The bank still looks with some concern at next week's budget events from a sterling perspective. Implications for growth and the bond market argue against short-term bullishness sterling. ING still prefers playing any GBP weakness through Cable rather than EUR/GBP.

In Turkey, the bank saw foreign exchange and bond market stabilization on Thursday after Wednesday's sell-off. The Central Bank of Turkey (CBT) supported the situation with a surprise increase in the O/N lending rate from 44% to 46%, while other rates remained unchanged.

From Thursday's trading, it seems that the central bank will try to keep USD/TRY below 38.000 for the following days in an attempt to restore confidence in the market and offset previous lira (TRY) losses, according to ING.

The bank believes that the CBT will try its best to maintain market stability over the coming period. However, ING thinks the main focus will be on the behavior of local participants rather than international investors, and the degree of local currency conversions to foreign exchange will drive the CBT's next steps.

At least in the short term, TRY seems "attractive" to ING again, but it's certain that the market will be hesitant to take more risk.