ECB: Limited risks from ECB meeting – ING

As mentioned above, markets are not showing much concern for the events in Poland. The Polish zloty is coming under some pressure this morning, but has lost a relatively modest 0.6% against the dollar and 0.4% vs EUR since the Russian drone news. Another European geopolitics benchmark – EUR/CHF – has actually traded higher after some dovish comments by the Swiss National Bank yesterday, ING's FX analyst Francesco Pesole notes.

EUR/USD to stabilize in the 1.170-1.175 area ahead of the weekend

"Markets’ approach to the Ukraine-Russia situation has remained generally cautious but optimistic-leaning, as gains in high-beta European currencies accrued in August haven’t yet been pared despite lacklustre progress towards a ceasefire. The benefits to the euro itself have not been significant, and the downside risks from a moderate unwinding of optimism should not hugely hurt the euro either."

"Today’s big event in the eurozone is the ECB meeting. Markets might be underestimating the doves’ opposition to the 'good place' narrative pushed by President Christine Lagarde and the hawks. However, recent communication and the above consensus core CPI have made it increasingly likely that the ECB has already reached the end of its cutting cycle."

"With political turmoil in France still on the front pages, markets may however be reluctant to fully price out the residual 15bp of easing priced in for 2026 just yet. All in all, we expect a quiet meeting with contained FX impact potential. If anything, we could see some euro softening as any comments on French bonds might be read as dovish indications. For now, we are looking at a re-stabilisation in the 1.170-1.175 area in EUR/USD ahead of the weekend."