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Geopolitical premium is slowing the zloty’s strengthening. The euro rate is close to support
The zloty awaits the RPP decision, while the euro remains close to an important level
The euro rate was still just above the 4,2250 zł level in the morning, which marks the lower bound of the broad range that has held since March. On Tuesday at 09:10, EUR/PLN was quoted at 4,2352 zł, only slightly higher than on Monday evening.
This matters for people exchanging currency today before a trip, repaying obligations in euros, or settling invoices in a foreign currency. As long as the rate stays above 4,2250 zł, the market is not sending a strong signal of a breakout from the current consolidation, that is, trading within a limited range.
From a technical analysis perspective, a break below this support could open the way toward last year’s lows in the 4,12-4,14 zł area. Analysts stress, however, that the still-existing geopolitical premium may continue to limit room for the zloty to strengthen.
In the short term, PKO BP analysts see a risk of EUR/PLN rising toward 4,25 zł and USD/PLN moving in the direction of 3,68 zł, especially if EUR/USD breaks support at 1,1580. On the domestic market, investors and companies will focus today on the RPP decision, that is, the Monetary Policy Council.
It is essentially a foregone conclusion that interest rates will be left unchanged. The market is expecting a possible hike no earlier than July, although even that remains uncertain. In the afternoon, the RPP statement at 16:00 will matter, and tomorrow the NBP governor’s press conference at 15:00. PKO BP experts say that a more hawkish, meaning more cautious about rate cuts, message could support the zloty.
With the euro-dollar market stable, USD/PLN was priced at 3,6341 zł in the morning, 0,8 groszy lower than a day earlier. The franc cost 4,6308 zł, and the British pound 4,8976 zł. For the franc, the broader range remains 4,60-4,66 zł, while for USD/PLN the 3,5580-3,6750 zł range has held since mid-April.
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