ING Research expects the ECB to raise rates by 50bos at its March meeting on Thursday.

"The dramatic re-pricing of the Fed policy curve has seen two-year EUR: USD swap rate differentials narrow inside 100bp - the narrowest since October 2021. This is EUR/USD positive. Unless there is a massive rally in US banking stocks, we would say EUR/USD is biased to the 1.0780/1.0800 area," ING notes.

"On Thursday this week, the European Central Bank policy meeting will be challenging. Presumably, it will have to push ahead with a 50bp hike for fear of adding even more volatility to the markets," ING adds.