Zloty's Corrective Pullback Continues

EUR/PLN extends its corrective bounce from recent cyclical lows (PLN4.4784), returning above the PLN4.50 mark and swinging into a weekly gain. There has been little in the way of fundamental domestic events as local headline flow has moved to a lower gear after an eventful start to the week.

• PKO attribute PLN depreciation to pressure from core markets and expect EUR/PLN to rise towards PLN4.54-4.56 into the weekend. Santander say that yesterday's bounce "could be a sign of a long awaited correction," which "doesn't have to be large." Alior Bank write that the recent miss in Poland's current account balance reduce the PLN's potential for further appreciation. Pekao say that the fundamental story about the zloty has been positive in the past few weeks and doesn't seem to have been fully exploited (albeit the most part of it is probably priced in), hence they are cautious with predicting any larger near-term EUR/PLN correction.
• The rate last deals at PLN4.5389, up 221 pips on the session. From a technical standpoint, topside focus falls on the 20-EMA, which intersects at PLN4.5589. It is worth pointing to a bullish failure swing in the RSI, albeit the pattern has unfolded over a very short term and technical traders will look for a further confirmation. Meanwhile, should the spot rate ease past yesterday's low of PLN4.4784, bears would set their sights on Jun 7, 2021 low of PLN4.4360.