Correction on the zloty market [Market comment]

On Friday, June 11 at 14 p.m., that is one hour before the president's videoconference National Bank of Poland (NBP) by Adam Glapiński, the zloty was weakening against the two main currencies. Stronger against the dollar, as it also reacted to the decline in the rate EUR / USD. Then you had to pay PLN 3,6865 for the dollar, and the euro cost PLN 4,47.

The zloty is losing against the main currencies

The fate of Friday's session has not been decided yet. Not before the speech of the President of the NBP, which was to bring the markets closer to the macroeconomic situation, but also to the prospects for monetary policy in Poland, which is dominant in the Monetary Policy Council.

However, even then it was possible to assume that nothing extraordinary would happen at this conference. Following the example of the Council meeting ended on Wednesday, its tone will be dovish and the market will reduce its expectations for faster interest rate hikes. And this would fit in with the current situation on the USD / PLN and EUR / PLN daily charts. On the charts, where after a longer appreciation of the zloty, there was a profit taking. 

USD / PLN declines stopped already on June 1. Later, the supply side tried to tighten the demand, but in the end it only led to the creation of support at PLN 3,6354. In the meantime, there was a breakout above the accelerated downward trend line, which opens the way for a stronger upward correction. Such a correction has not yet been realized. So far, the dollar is in a horizontal trend of PLN 3,6354-3,6966. However, the probability of exiting from the top increases with each passing day, which could increase to PLN 3,7560-3,7675. There it will be decided what to do next. Will the return be permanent, as in August and December 2020, and will the dollar increase to PLN 4? But is it just a correction, and in a month's time the dollar will hit December lows, opening the way for deeper declines?

USD / PLN daily chart. Source: Tickmill

The situation on the EUR / PLN daily chart is more obvious. In May, there was a change in the long-term trend there, so now all upward rebounds should be treated only as upward corrections. The range of this, which started on June 7, is limited by a line running along the peaks of March and May, which closes the downward channel from the top. Currently, it creates resistance at PLN 4,5050. This is all that can win the demand. And there is not much time for it, because the pressure of sellers is high, therefore the euro should drop below PLN 4,38 in the summer.

EUR / PLN daily chart. Source: Tickmill