06:02 AM EDT, 10/03/2025 (MT Newswires) -- EUR/USD remains glued to the 1.1700 area, said ING.

Three-month traded volatility has dropped to its lowest level since last November, at 6.60%. Interestingly, the three-month risk reversal skew in the EUR/USD currency options market remains at 0.5% in favor of euro (EUR) calls, wrote the bank in a note.

So, it's not as though investors have given up on the EUR/USD upside, but it's more that they think there will be less volatility in general, stated ING.

Lower energy prices are good news for the euro, pointed out the bank. The euro's terms of trade -- export less import prices -- are towards the higher levels of the year as both crude oil and natural gas prices soften. This will help the euro's valuation metrics.

For Friday, there's little eurozone data of note, but investors hear from European Central Bank speakers Christine Lagarde, Isabel Schnabel and Pierre Wunsch. The ECB script at the moment remains one of the 2.00% deposit rate being at a good place, but the central bank wouldn't hesitate to act if needed. That threat to act probably means one further rate cut should inflation undershoot at a time of weak activity.

However, markets struggle to price another 25bps cut in this cycle.

It's hard to see EUR/USD moving out of a 1.1700-1750 range on Friday, according to the bank.

Markets shifted to the dovish side after the Central Bank of Turkey's (CBT) larger-than-expected rate cut, and one-year OIS is close to its lowest levels since the start of the hiking cycle in 2023. Although the market has become accustomed to political headlines, the threat of a cutting cycle should still have an impact, especially at the front of the curve, added ING.

Currency, on the other hand, remains on a stable weakening path, and the bank believes that nothing will change here until at least the end of the year. As a consequence, the lira (TRY) remains the bank's favorite carry currency in the EMEA world. ING expects USD/TRY to head towards 45.00 at the end of the year, but still very well compensated on the carry side.

The Czech Republic is holding parliamentary elections on Friday and on Saturday. Polls widely suggest a change of government, and the question is whether the main opposition party will form a minority government with the support of some parties or whether markets will see a coalition of the current opposition parties.

In recent weeks, markets have begun to price in some risk premium, particularly at the end of the bond and IRS curves, signalling fiscal expansion compared with the current fiscally conservative government, noted ING. At the same time, the Czech central bank (CNB) sees fiscal policy as one of its inflation risks, which would suggest higher rates in the future.

However, the bank considers market concerns to be exaggerated and sees Czech assets as cheap after the sell-off in recent weeks. The koruna (CZK) remains unchanged for now, and the pre-election impact is particularly visible in the fixed-income universe.

Although ING doesn't predict significant changes on the fiscal side in any election scenario, this may be one of the factors for the CNB to remain hawkish, which should further support the currency. As a consequence, despite some potential volatility in the short term, the bank continues to forecast EUR/CZK to head towards 24.00.