EURPLN Trades at Daily High as EM FX Faces Pressure

The Polish zloty sits second to only the Hungarian forint as the poorest performing currency in the EMEA region, with losses against the euro standing at 0.65% on the day. The cross has now recorded a 1.1% bounce off of Monday’s lows, where support at the 50-DMA was respected. USDPLN, meanwhile, stands 1% stronger today amid broad greenback strength, with the pair close to last week’s highs at typing. Given the limited number of local economic releases on the docket for the remainder of the week, attention turns to the ECB rate decision on Thursday and accompanying communication regarding future rate cuts.

• Last week, EURPLN breached both resistance at 4.3749, the Jan 3 high, and the 50-day EMA. The bullish development signals scope for a continuation higher to 4.4124, the Jan 17 high and bull trigger. A break there would open 4.4477, the 38.2% retracement of the Sep - Dec bear leg last year.
• NBP's Joanna Tyrowicz, a known hawk, reaffirmed her familiar views in a LinkedIn post earlier today, noting that the central bank's model implies that raising the reference rate by 200bp to 7.75% would significantly increase the odds of bringing inflation to the target. Given the comments are in-line with her stance on monetary policy, they have been unable to offer the local currency any reprieve.