Report published May 26, 2026

FX Daily: Bumpy De-Escalation – Currency Market Analysis by ING

ING · May 26, 2026

The US dollar remains supported despite Middle East de-escalation as markets price in a more hawkish Federal Reserve concerned with inflation shocks. In Europe, soft economic data is scaling back ECB rate hike expectations.

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Finvaulta summarizes ING's analysis. Attribute opinions, forecasts, time-sensitive values, and chronology to the issuer and report date; do not treat this page as an independent verification or a current market-data source.

Key Takeaways

1.The US Dollar remains supported as the Federal Reserve pivots towards a more hawkish stance to address inflation risks tied to high oil prices.
2.European Central Bank tightening expectations have dropped from over 80bp to 55bp this year following soft PMI data indicating a Q2 economic contraction.
3.The National Bank of Hungary (NBH) is expected to keep rates at 6.25% today, but the market is heavily pricing in a rate cut for June.

USD: Fed story providing support
EUR: Whatever happened to three ECB rate hikes?
HUF: NBH getting closer to rate cuts
CEE: Time to reduce market hawkish pricing
Author

Report data

Risk assets vs. US Dollar

Metric	Estimate	Context
ECB tightening priced for the year	55 bp	Markets adjusted expectations based on soft PMI data.
NBH Policy Rate	6.25%	Economists' expectation for the current meeting.
US PCE headline inflation forecast	3.8%	Forecasted rise from 3.5%.

Source: Market pricing; ING Economists; Christopher Waller / Fed. This is a dated model snapshot, not a live forecast.

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Authors / Editors

Chris Turner · Global Head of Markets and Regional Head of Research for UK & CEEFrantisek Taborsky · EMEA FX & FI StrategistFrancesco Pesole · FX Strategist