The dollar exchange rate drops below PLN 4. The largest series of EURUSD increases in 4 years

On the morning of February 22, 2024, the rate of the main currency pair EUR/USD climbed to levels that were last observed when the labor market data from the United States were published on February 2. This means that the market has completely turned around after a series of positive publications from the US in the form of a better employment report and higher CPI and PPI inflation readings. This also means that perhaps investors took advantage of the good data to take profits from long positions in the dollar, which hedge funds can be very happy about. According to the commission's reports CFTC Since December, speculators on US dollar contracts have been adding positions that allowed them to profit from the decline in the USD value. Now these positions are slowly starting to bring potential profits and perhaps this is not the end.

Best EUR/USD series since July 2020

EUR / USD exchange rate is rising today for the seventh day in a row, which is the longest series of increases since July 2020. So we see that we are dealing with a phenomenon that occurs quite rarely. Perhaps something is changing on the market, which may also be confirmed by the fact that the dollar's weakness appeared along with the lack of decline in US bond yields. Usually these events go hand in hand. However, it is possible that yields will also be lower in the next few weeks, which may further contribute to USD weakness at the turn of February and March. The key may be the PCE inflation data next week and the observation of the yield of 10-year bonds, which oscillate at 4,30%.

The dollar exchange rate is below PLN 4

The positive sentiment also persists on the Polish zloty, where a dollar costs less than PLN 4. This morning, the USD/PLN exchange rate fell to the lowest level since February 2, and the PLN may also be helped by the positive sentiment related to KPO and the results of WSE-listed companies attracting foreign capital. Therefore, it seems that the only thing missing from this puzzle and an even stronger zloty is a drop in profitability in the US; if this happened, the dollar exchange rate could even go towards 3,90 or even lower. The first important hints about this potential scenario may appear in a week's time with the above-mentioned PCE inflation reading from the US.