FX option expiries for 15 May 10am New York cut

is back to trading close to the 1.120 mark, entirely driven by the swings in the US dollar following the United States-China deal and consumer price index numbers, said ING.

The bank's one-month target for the pair is 1.12, on the view that markets will retain interest on short-USD positioning ahead of expected U.S. data deterioration, but that the euro isn't particularly well positioned to benefit from it as the European Central Bank continues to cut, and markets may look with more interest at higher beta currencies on the back of better risk sentiment.

In eurozone macro news, the ZEW expectations survey rebounded in May, showing increased hopes for U.S. trade deals, although the current situation gauge failed to show any recovery, stated ING.

The only data in the eurozone on Wednesday are some final CPI prints, and investors will hear from the ECB's Jose Luis Escriva, Joachim Nagel, Francois Villeroy de Galhau and Robert Holzmann. The bank expects some stabilization around 1.120 in over the coming days.

The United Kingdom's jobs market has continued to cool, pointed out ING. However, there hasn't been any sign of material deterioration after the April employer tax hike, and wage growth remains too high to make the Bank of England shift to a faster gear with monetary easing.

In short, the U.K. labor market is slowing, not collapsing, and that is translating into a steady fall in wage growth.

The BoE will want to see this trend continuing for a few more months before it becomes more confident on the wage story, added UNG. Until then, next week's services inflation number will be much more consequential, given that April's data is when the big annual price hikes kick in. ING thinks this could come in a little below the BoE's forecasts, which would help cement an August rate cut.

has now approached 0.840, and the bank reiterates its call for a break lower ahead of European Union-U.K. trade talks next Monday.

The Czech koruna (CZK) has been the bank's favorite currency within the Central and Eastern European region for the past two months, as it has shown strong resilience to global events.

ING continues to view it as a high-quality choice, but the central bank's (CNB) neutral stance on additional rate cuts has slightly dampened ING's optimism about the CZK last week. However, the market is still pricing in a terminal rate of around 3%, which is more rate cuts than in the bank's forecast.

In addition, risks are building more on the hawkish side in terms of inflation and the economy. Although ING could see a test of 25.00 in the coming days due to a jump in EUR rates, the bank retains the view that will head lower in the coming months.