The euro to dollar exchange rate is heading towards USD 1,11

Before Christmas, the quotations of the main currency pair managed to breach the round level of USD 1,10, where the peaks were at the end of November this year. Yesterday's session saw a continuation of the upward movement and confirmed the breakout of the above-mentioned barrier. Despite the small variability EUR / USD slowly heading north.

Today, the rate managed to stay above the level of 1,1050 for a while, which indicates the possibility of attacking the next resistance at USD 1,11. This position is a result of the broad measurement of the 78,6% Fibonacci, which was established over the entire downward trend from July to October 2023. At the moment, there are no technical signals that could indicate a change in the trend. The macro calendar is also almost empty, that's why the current sentiment may continue. This afternoon we will only know the US Richmond Fed index for December, and late in the evening the API report on stocks oil in Usa.

The BoJ will not change its dovish attitude

However, greater volatility may occur in the Japanese yen. At night, data on industrial production and retail sales in Japan will be released. Let us recall that the BOJ maintains an ultra-loose monetary policy and, according to the latest publications of the Bank of Japan, bankers do not intend to change their "dovish" attitude for now. This is a very interesting position because investors expect that in 2024 there will be a long-awaited increase in interest rates – currently such a move is estimated for June.

Looking at USD/JPY quotes, there has been a downward trend since mid-November. The key short-term resistance remains around 144,20. It seems that until the rate returns above, the depreciation should be expected to deepen. The closest support is at 141,00, which is the low from December 14.

Continued growth of the zloty?

Looking at the zloty, it strengthened yesterday and today it is losing slightly. Nevertheless, a favorable situation on EUR/USD - weakness of the dollar, can support our national currency. If the upward trend in EUR/USD continues, the zloty may continue to strengthen. It is worth noting that the USD/PLN exchange rate remains below PLN 3,94, which from a technical point of view supports the scenario of further declines.

EUR/PLN, in turn, remains in consolidation, but the long-term trend for this pair is also down. It seems that only a permanent price break above the zone of PLN 4,40-4,41 could change the balance of forces on the chart. Previously, the area around PLN 4,36 should also be treated as resistance. Today in the morning you have to pay PLN 3,9195 for a dollar, PLN 4,3330 for a euro, PLN 4,5980 for a franc and PLN 4,9895 for a pound.

Source: Łukasz Stefanik, XTB