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PLN: Zloty Pauses Gains Amid Wider Risk Aversion

PLN
PolandCEEMEAEM BulletBulletEmerging Market News

EUR/PLN printed a new local minimum at 4.2086 towards the back end of last week but has struggled to extend gains and attack the psychologically significant 4.20 figure as weekend developments prompted market participants to seek safer assets. Weak Chinese data and renewed US tariff threat have conspired against EM FX, with EUR/PLN adding 54 pips to last change hands at 4.2174.

  • A brief period of stabilisation could allow the rate to unwind oversold conditions. The RSI is already back above the 30 threshold, while the spot rate has returned above its lower Bollinger band (4.2136). In the meantime, bulls look for a stronger recovery towards the 50-EMA (4.2688), while the 4.20 mark remains a key line in the sand for bearish participants.
  • Pekao write that whether buyers will be able to force a rebound in EUR/PLN will be an important test for the pair and a failure would "be a signal that the downtrend is very strong and has much room for continuation." Millennium Bank note that the zloty seems poised to test 4.20 soon. On the other hand, BGK warn that an increase in global risk aversion may hurt the zloty and they see potential for an uptick to 4.23 today, should sentiment fail to improve during the Wall Street session.
  • The latest round of comments from MPC members offered little in the way of fresh insight. Ludwik Kotecki reaffirmed his view that a discussion on monetary easing (note the contrast between a debate and easing itself) could take place as soon as in March, while the reference rate could fall by 100bp before the year-end. Ireneusz Dabrowski said that the NBP may need to wait two-three quarters before cutting rates, but failed to provide a more specific forecast.
  • POLGB yields have faltered (by 1.2-3.4bp) in sync with trends in core markets, with US Tsy yields dropping across the curve.
  • The WIG20 Index has shed 1.1%, snapping a six-day winning streak and pulling back below its 200-DMA.
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EUR/PLN printed a new local minimum at 4.2086 towards the back end of last week but has struggled to extend gains and attack the psychologically significant 4.20 figure as weekend developments prompted market participants to seek safer assets. Weak Chinese data and renewed US tariff threat have conspired against EM FX, with EUR/PLN adding 54 pips to last change hands at 4.2174.

  • A brief period of stabilisation could allow the rate to unwind oversold conditions. The RSI is already back above the 30 threshold, while the spot rate has returned above its lower Bollinger band (4.2136). In the meantime, bulls look for a stronger recovery towards the 50-EMA (4.2688), while the 4.20 mark remains a key line in the sand for bearish participants.
  • Pekao write that whether buyers will be able to force a rebound in EUR/PLN will be an important test for the pair and a failure would "be a signal that the downtrend is very strong and has much room for continuation." Millennium Bank note that the zloty seems poised to test 4.20 soon. On the other hand, BGK warn that an increase in global risk aversion may hurt the zloty and they see potential for an uptick to 4.23 today, should sentiment fail to improve during the Wall Street session.
  • The latest round of comments from MPC members offered little in the way of fresh insight. Ludwik Kotecki reaffirmed his view that a discussion on monetary easing (note the contrast between a debate and easing itself) could take place as soon as in March, while the reference rate could fall by 100bp before the year-end. Ireneusz Dabrowski said that the NBP may need to wait two-three quarters before cutting rates, but failed to provide a more specific forecast.
  • POLGB yields have faltered (by 1.2-3.4bp) in sync with trends in core markets, with US Tsy yields dropping across the curve.
  • The WIG20 Index has shed 1.1%, snapping a six-day winning streak and pulling back below its 200-DMA.