The zloty remains under pressure. The dollar is close to this year's maximum

Although key technical resistances on the zloty market remain in force, the Polish currency is still under pressure. The fate of the zloty in the short term is related to the situation in the Persian Gulf.

The lack of de-escalation of the war in the Middle East on Monday brought the price of Brent crude oil to close to USD 110 per barrel. The main zloty currency pairs followed the rising fuel prices. The euro exchange rate approached the line of PLN 4.30, and the US dollar stopped at the threshold of PLN 3.75.

On Tuesday morning, the euro was worth PLN 4.2849, which is only slightly less than the day before. For the euro-zloty pair, the key zone is PLN 4.30-4.31, which constitutes strong medium-term resistance. A possible breach of this level based on technical analysis would have serious and negative consequences for the zloty. Potentially, the next stopping point would be the PLN 4.40 line.

We are even closer to breaking the March resistance on the dollar-zloty pair. On Monday, the USD/PLN exchange rate broke the line of PLN 3.75, also strengthening in relation to the euro. However, it is still too early to announce a change in the downward trend in the USD-PLN pair that has been in force since October 2022.

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– PLN quotations remained dependent on the development of the situation in the Middle East and its impact on global markets. Recently, there have been no credible signals of de-escalation of the conflict in the Persian Gulf, and recent reports (the Houthi rebels from Yemen joining the conflict, threatening to blockade the Bab al-Mandab Strait, the growing risk of an invasion of Iran by US land forces) indicate the possibility of its further escalation – PKO BP economists wrote in the morning report.

– In the absence of clear signals of de-escalation of the conflict in the Persian Gulf, the current unfavorable trends for the zloty may continue, which would push the EURPLN rate towards 4.30 and the USDPLN rate towards 3.7650, which is the upper limit of the already violated medium-term resistance zone – they added.

However, the relative weakness of the Swiss franc continued and on Tuesday morning it fell by 1.5 groszy, reaching the price of PLN 4.6675. The Helvetic currency is trading close to the lowest levels this month and has fallen by over 10 cents since the March peak. The British pound was valued at PLN 4.9328, similarly to the day before.

K.K

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