06:25 AM EST, 11/28/2024 (MT Newswires) -- EUR/USD found some support Wednesday from a detailed interview given to Bloomberg News by Isabel Schnabel, the European Central Bank's influential policymaker, noted ING.

A few of her comments stood out, including that easing should be gradual and that there is no need to take rates into accommodative territory, which is seen as under 2%. The neutral ECB interest rates may be in the 2%-3% area with 2%-2.25% the commonly seen neutral rate, ING said

Her pushback against a 50bps rate cut in December has helped market pricing for that meeting move in from 38bp last week to 28bps on Thursday, wrote the bank in a note.

That has helped the 'Atlantic' rate spread narrow by some 8bps and provided some support for EUR/USD, stated ING. This spread could narrow further if the Federal Reserve cuts 25bps in December, which is the bank's view, and the ECB only cuts 25bps -- 50bps is currently ING's view.

Investors should remain wary of developments in French politics after Marine Le Pen's faction of the far-right RN indicated that it could pull the plug on Michel Barnier's government next week over a budget vote.

The French-German sovereign 10-year sovereign bond spread has widened to levels last seen in 2012, which is worrying for the euro (EUR) and a reminder that any chance of fiscal support from either France or Germany is remote, pointed out ING. Indeed, the bank is surprised that EUR/CHF managed to edge higher on Wednesday and instead, it sees it returning to the 0.9200/9210 area, where the Swiss central bank bids may be waiting.

On the eurozone calendar on Thursday, there are the European Commission confidence data for November and German inflation. 1.0565/0580 may be the top of the short-term trading range and ING favors EUR/USD drifting back to 1.0500 in quiet markets.