ING Comments on Euro After Davos Relief on Greenland; Notes Turkey's Lira Ahead of Central Bank Decision

06:16 AM EST, 01/22/2026 (MT Newswires) -- EUR/USD has slipped back below 1.170 in line, noted ING.

The pair continues to be almost entirely driven by the US dollar (USD) moves and the unwinding of tariff risk on the back of a framework Greenland deal agreed at Davos, which is proving enough to revive some US dollar bulls, wrote the bank in a note. The USD downside risks haven't all disappeared, but further abating of geopolitical tariff risk can favor another gentle leg lower in EUR/USD.

ING still sees risks extending to 1.1600 in the short term for EUR/USD. Thursday appears to be a better opportunity for a move lower in the pair than on Friday, when eurozone PMIs are released and can fit the narrative of an improved eurozone macro outlook.

Given Turkey's central bank (CBT) easing bias, lower than expected December consumer price index driven by non-food items and reserves at all-time highs, ING expects a 150bps cut to 36.5% in Thursday's MPC meeting. However, risks are on the downside toward a lower 100bps adjustment as early indicators point to strengthening pricing pressures in the food group this month and recent data signal a recovery in domestic demand.

Market pricing has stabilized at around 150bp for Thursday's meeting, stated the bank.

The Turkish lira (TRY) remains a largely unchanged story, and ING enters this year with the same positive carry view. The bank believes that the combination of a market resistant to political headlines, a slow but steady cutting cycle and record high foreign exchange reserves are ideal for the continuation of the current currency regime.

As a consequence, ING believes that TRY will remain the main carry trade in the emerging market space. That markets have the same view is also indicated by the increasing long positioning in TRY, which has grown to around US$50 billion according to the bank's estimates and surpassed the levels from the March peak before last year's sell-off.

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