EURPLN - Change in the balance of forces on the chart

The last week of May brings a very big change in the balance of power on the EURPLN daily chart. As a result, the risk of another wave of zloty depreciation, which until recently hung over the currency market, has decreased to zero. This means that the level of PLN 4,6324, tested in mid-March, was the peak of weakness of the Polish currency.

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EURPLN depreciates

The change in the balance of strength on the EURPLN daily chart is the result of yesterday's breaking down below the support zone 4,50-4,5090 PLN, which is the lower limit of consolidation in which the EURPLN has been moving since Easter. This breakout opened the road to around 4,4470 PLN. The observed downward movement dynamics, while maintaining good sentiment to the currencies of the countries included in the group emerging markets suggests that the declines may be even deeper. The descent to the region of 4,3988-4,4131 PLN is real, where the high demand barrier is created by peaks from July 2018 and August 2019 and the psychological level of 4,40 PLN.

EURPLN chart, D1 interval. Source: MT4 Tickmill.

Strengthening of the zloty is taking place despite the recent series of disappointing data from the Polish economy. It seems that investors "Rationalized" these data, assuming their only one-time nature and expecting improvement in the coming months. Only if these hopes were vain could the condition of the Polish economy begin to weigh on the zloty again.