Euro EUR/PLN rate - forecast for the current week
The dovish tone in the NBP President A. Glapiński’s narrative led to a fairly strong discount of the zloty last week. The same direction was influenced by the return of tension in the Strait of Hormuz. The rise of the EUR/PLN rate stopped at 4.35, which could be a strong psychological resistance. The range of movement, in our opinion, has largely exhausted itself, as technical factors also point to this. This week we assess the risk balance for the EUR/PLN rate as balanced.
Our expected slight revision of market expectations regarding the pace of rate cuts in Poland will benefit the zloty, while tension in the Middle East may trigger risk‑off capital rotations that negatively affect emerging market currencies.
Therefore, for this week we assume a stabilization of the EUR/PLN rate in the 4.32‑4.35 channel.
It is also worth noting EUR/USD movements, as in recent weeks the negative correlation between the pairs is quite strong (a stronger dollar against the euro translates into a weaker zloty against the euro).
USD/PLN rate
With the stabilization of the EUR/PLN and EUR/USD pairs, the USD/PLN rate will also remain stable in our view. The risk for this scenario remains geopolitics and possible surprises in U.S. inflation data.
Currency forecasts
EUR/USD rate
Last week the EUR/USD rate was in consolidation. Levels reached after the weak labor market report a week earlier were not broken, indicating a fading strength of the ongoing correction. At the same time, medium‑term indicators suggest that the pair is still in a downtrend. However, we doubt whether further strengthening of the dollar against the euro can be justified fundamentally.
The market already prices nearly two rate hikes after a 25 basis point increase in the U.S. by April 2027 and one hike in the euro zone. While another ECB hike seems quite likely, the expectations for the Fed are considered hawkish. The dot plot from the previous FOMC meeting showed a path between keeping rates unchanged and one hike.
The Tuesday June inflation release and Friday consumer inflation expectations in the University of Michigan index may prove a test for these expectations (lower readings than expected could favor a discount of the eurodollar). In addition, limited oil price increases, with continued rises in TTF gas prices, could support the euro against the dollar. Given these mixed signals, we assume a consolidation of the EUR/USD rate in the 1.1461‑1.1392 channel this week.
