Tuesday's PLN Rally Loses Steam, Poland Observes Holiday

EUR/PLN has inched higher and last sits at PLN4.5822, up 23 pips on the session. Our technical analyst flags the 20-EMA at PLN4.6164 as the initial firm resistance to watch. On the flip side, bears continue to target May 30, 2022 low of PLN4.5599.

• NatWest said in a research note that they "turn outright bullish PLN" and tweak their EUR/PLN forecast to PLN4.40 from PLN4.64 by end-2023. They point to the rotation out of CE3 peers, structural improvement in Poland's current-account position, expectations of fast disinflation, as well as the worst-case political scenario being "already out there."
• This comes after late last week Goldman Sachs said that the Zloty's recent gains will prove short-lived due to the NBP's "relatively more dovish" stance, which raises the risk of a "token" rate cut being delivered before the election later this year. They added that "the case for Zloty strength may be clearer later in the year in Q4 once the election-related headline risks are in the rear view."
• PLN liquidity remains reduced with Polish markets shut for the Constitution Day. This follows a brief re-opening yesterday, which came on the heels of a long weekend.