ING Comments on Euro, Turkey's Lira

06:16 AM EST, 12/11/2025 (MT Newswires) -- EUR/USD ended slightly higher after the Federal Reserve policy meeting on Wednesday, said ING.

Also helping has been a string of European Central Bank optimists referencing growth surprising on the upside, noted ING.

An additional ECB rate cut has now been priced out, but it may be far too early for markets to have the confidence to price in 2026 ECB rate hikes, wrote the bank in a note.

ING expects EUR/USD to consolidate in the high 1.16s, and a move to the bank's 1.1800 year-end target will probably take some soft United States jobs data next week or some important positive growth forecast revisions from the ECB next week, stated the bank.

On Thursday, Turkey's central bank (CBT) will make its final interest rate decision of the year. While the November inflation data should encourage the CBT to remain on its easing path, the latest Q3 gross domestic product data and early indicators for the last quarter imply less supportive demand conditions for the disinflation process, increasing upside risks to the inflation outlook with the ongoing rate cut cycle and easing financial conditions.

Accordingly, the central bank will likely remain cautious with a measured 100bps cut on Thursday, though ING won't rule out the possibility of a larger cut.

The rates market has seen a strong rally since the end of October and the latest inflation figures have somehow restored confidence in the disinflation process and the continuation of rate cuts. For Thursday, markets are pricing in around a 100-150bps rate cut and unless the central bank surprises with a larger rate reduction, ING probably shouldn't see a major reaction.

USD/TRY remains on an upward trajectory and the bank doesn't forecast any changes in the current currency regime anytime soon, given the CBT's cautious approach to the cutting cycle.

As a consequence, ING believes that the lira (TRY) will remain a popular carry trade in 2026 as well, despite the ongoing cutting cycle. For the middle of the year, the bank predicts USD/TRY to be 48.40 and 51.00 at the end of the year.

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