Withdrawal of the veto and good moods support the zloty

Euro the cheapest in relation to the zloty for 3 months, and the dollar for over 2 years. Both currencies were also below important support levels, which opens the way for further declines. It looks like the end of 2020 and the beginning of 2021 will belong to the zloty.

"Poland and Hungary initially accepted the proposal of the German presidency of the European Union regarding the EU budget, now they are waiting for the approval and possible comments from the Netherlands and other countries." Such information was provided today by the Reuters agency, citing a high-ranking representative of the Polish government. Thus, both countries withdraw from vetoing the EU budget and The Reconstruction Fund, which the currency market used as a pretext to play to strengthen the zloty.

Reports on the withdrawal of the veto by Poland and Hungary appeared yesterday evening, giving this morning a perfect excuse to play to strengthen the zloty. Not the only one. The zloty, like many other emerging market currencies, was also supported by good moods in global markets and an increase in risk appetite.

PLN exchange rate up

The appreciation of the Polish currency might not arouse so much emotions if it were not for the fact that it leads to significant changes on the EUR / PLN and USD / PLN charts. The decline in EUR / PLN below PLN 4,42, and USD / PLN below PLN 3,65, led to the breaking of important supports on the charts of both of these pairs. As a result, the demand side forfeited the chances of generating a correction of the declines lasting from the beginning of November, and at the same time the path to further declines was opened.

EUR / PLN daily chart. Source: Tickmill

The fall of the EUR / PLN below the support zone of PLN 4,4404-4,4480, which was formed by the low from October and the local minimum from December 2, preceded by an earlier break of the line following the holes in January and August this year, means the announcement of a descent below PLN 4,38 . Only there the demand side can stop the declines, supported by the wide barrier of PLN 4,3570-4,3735, created by 61,8% abolition of Fibo and the June-August lows.

The USD / PLN pair has even more room for declines.

USD / PLN daily chart. Source: Tickmill

The fall of the dollar below PLN 3,6550-3,6599, i.e. the August-September lows, is in line with the weakness of the dollar, which is also observed in relation to many other currencies, and at the same time it opens a space for declines unlimited by the close support. The more that the only argument in the arsenal of the demand side is currently only a significant sell-off of the dollar. However, this does not prevent him from falling further. Hence, it can be assumed that in January the USD / PLN exchange rate will hit the level of PLN 3,55-3,58.