Dollar below PLN 3.60. The euro is the cheapest since April and is testing the support line

Monday morning greeted us with the euro rate at the lower limit of this year's sideways trend. However, the US dollar dropped again below PLN 3.60, heading towards the lowest level in three months.

At 10:30 the euro rate was PLN 4.2204 and was the lowest in over 8 months. In this way, the euro/zloty is testing the support line and at the same time the lower limit of the horizontal trend that has been ongoing since April. Based on technical analysis, a permanent decline below PLN 4.22 would suggest a decline in the euro rate towards the February minimum (approx. PLN 4.13).

– In the pre-Christmas week, the set of factors affecting the zloty will not change. The dollar, negatively correlated with EM currencies, will be indirectly influenced by monthly data from the US labor market and the CPI inflation reading. Media reports also indicate that a lot will happen around peace negotiations regarding the war between Russia and Ukraine, PKO BP economists point out.

It seems that in the short and medium term this last factor may be decisive for the fate of the zloty. The market may begin to discount some form of ceasefire in Ukraine (or even lasting peace), as evidenced by reports of ongoing talks at the highest level.

The final CPI inflation data for November did not have a major impact on the Polish currency market. The Central Statistical Office revised the original reading slightly upwards, which does not change the broader picture of the situation. At the moment, Polish consumer inflation is within the central bank's target, which opens the door to further interest rate cuts at the National Bank of Poland in 2026. This has been the market consensus for many months.

It is worth noting that Monday's strengthening of the zloty took place amid a stable situation on the euro-dollar pair. However, this was enough for the “green” price on the Polish market to drop below PLN 3.60. In the morning the dollar was quoted at PLN 3.5944.

The Swiss franc was valued at PLN 4.5122, which is closer to the lower limit of the consolidation that has been ongoing since April. The CHF/PLN exchange rate has been in the range of PLN 4.50-4.60 for over 8 months.

However, the British pound cost PLN 4.8105 and was already 4 groszy cheaper than a week ago. This stopped the attempt to rebound the pound-zloty pair, which in mid-November was at its lowest level in 6 years.

K.K

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