Zloty Tad Firmer, Analysts See Potential For Further Appreciation

EUR/PLN is having difficulties with printing lower lows, even as the recent downtrend remains intact. The pair deals at 4.3631, a touch lower on the day, with bears looking for a breach of Nov 21 low of 4.3411 to confirm that they remain in the driving seat. The next key technical level below is 4.3237, the low print of Mar 12, 2020. On the flip side, the focus falls on the 20-EMA at 4.4137.

• ING wrote that they expect EUR/PLN to ease towards 4.35-4.34 in the coming days and a deeper sell-off (towards 4.30) into the end of the year cannot be ruled out, as Poland may receive the first tranche of its allocation of funds from the EU's Recovery and Resilience Facility. Pekao believe that we should soon see an attack on 4.35 and a break here would open the way to 4.31 or even 4.26.
• The process of government formation remains under scrutiny, with a presidential aide noting that the new administration could be sworn in on December 13. Acting Prime Minister Morawiecki's efforts to stay in power seem doomed to fail, which will pave the way for the handover of power to the pro-EU coalition.