ING Comments on Euro, Sterling, Hungary's Forint

06:22 AM EDT, 07/17/2025 (MT Newswires) -- Aside from Wednesday's very brief spike induced by Federal Reserve Chair Jerome Powell removal speculation, EUR/USD looks rather comfortable trading in the low 1.16s, said ING.

That's despite US dollar (USD) short-term swap rates trading some 4bps-5bps below Wednesday's peak, as risks of the new Fed chair being an ultra-dove increased, wrote the bank in a note.

Anything European Union-related appears to be playing second fiddle to EUR/USD, stated ING. French political noise can return in the fall and generate some currency spillover, but for now it's not showing any tangible impact on foreign exchange.

On the broader EU level, the European Commission (EC) has proposed a two trillion euro increase in the EU budget, which has already been rejected by Germany. There's a long period of negotiations ahead as EC President Ursula von der Leyen aims to gather a unanimous consensus on the budget increase by 2027. Investors will hear a lot about this along the way, and the implications for the long-term value of the euro are non-negligible.

"Moribund" eurozone productivity relative to the United States has contributed to keeping the medium-term EUR/USD fair value capped in the past decade, pointed out the bank. Back to the short term, ING thinks risks are balanced for EUR/USD and heavily U.S. data dependent. In the coming weeks, the bank believes a move to 1.150 looks more likely than 1.170.

Last month, a surprise 109,000 fall in May United Kingdom payrolls opened the discussion on whether the Bank of England had to accelerate easing. That figure was revised massively on Thursday to just -25,000. June added another 41,000 worth of job losses, which confirms a clear softening pattern, but the big revisions for May should take some heat off the BoE, added ING.

Wage growth is also still too high for the BoE's liking, though, on a three-month annualized basis, private sector pay is rising at 3.6%, which is better than the year-on-year numbers indicate and is lower than the bank saw much of last year. EUR/GBP reaction to the data has been modestly negative, but given the bar for a BoE dovish repricing is now higher, the 0.870 level should work as a sturdier resistance.

Hungary's forint (HUF) saw a decent rally in June and ING has seen building long positioning in the market as a view of high carry and lower volatility during the summer. While there have been many market calls at 390-395 levels, the bank remains in a more neutral camp at current levels around 400 EUR/HUF.

Markets have priced out most of the rate cuts and ING can't see more support from this side. Although the bank doesn't predict rate cuts this year, July should show weaker inflation numbers, which may lead to more dovish pricing and again undermine HUF strength. As such, ING doesn't expect much from current levels now and in future sees EUR/HUF to rise again to 410 by the end of the year in its forecast under more dovish market pricing.

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