The PLN market weekly overview - resistance sustains the attack
|This past week was crucial for the currency market movements in the next couple of weeks. The Fed (as expected) has confirmed it will start decreasing its balance sheet from the current 4.5 billion USD. At the same, surprisingly, it reassured it plans to hike interest rates one more time this year. That's not good news for the stock markets and fore sure such news affect the currency market. The Polish Zloty got some boost from the local macro news publications. First of all, it was announced that the budget deficit has declined by around 6 billion PLN (around 1.4 bln EUR). Additionally, macro publications (for August, yearly basis) came out better than expected - average wages in grew by 6.6%, industrial production increased by 8.8%, retail sales by 7.6% while the PPI stood at 3%. From the economy side, all looks good. There is still tension between the Polish government and the European Union regarding the courts acts, out of which one has been introduced while the other two are being prepared by the president. The acts give too much power to the general prosecutor and ministry of justice (who in Poland is the same person). The outcome of it might be decisive as traders might lose or gain trust in the PLN.
As we see on the daily chart, the EUR/PLN attacked the 4.29 resistance again, but was unsuccessful to follow. If this is broken, the market will target 4.35, which are the highs from april of this year. The market is becoming slightly oversold, as shown by the stochastic oscillator so such scenario is possible. On the other hand, the market might be tired of trying to break the resistance. The first local support is at 4.26 and if broken, the EUR/PLN should head towards 4.24.
Pic.1 EURPLN-ECN D1 Source: MT4 Supreme Edition, Admiral Markets
The USD/PLN was much more predictable. As I have mentioned before, the market was heading towards the 3.52 support (april 2015 lows) and it finally reached it. It seems the market has been oversold for some time and that a rebound could be expected. If so, the 3.60 resistance needs to be broken. Otherwise, the USD/PLN will test the support again and if that is broken, we could see levels below 3.50 (last seen in 2014).
Pic.2 USDPLN-ECN W1 Source: MT4 Supreme Edition, Admiral Markets
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