The PLN market - Weekly overview

Adam Narczewski Independent Analyst

As expected, it has been a rough beginning of the week after the French presidential elections. LePen came in a close second but it seems the second round has only one favourite - Macron. The risk is gone (at least that is how the market interpreted it) and emerging market currencies got a boost. The Polish Zloty has certainly benefited from the post-French elections effect. Additionally, we got some pretty good news from the economy. The unemployment rate in March dropped to 8.1%, the lowest level in the 21st century. The stronger labor market was noticed by Moody’s, which increased Poland GDP’s forecast for 2018 from 2.8% to 3.1%. It has also lowered its expectations regarding the deficit of public finances in 2017. - from 3.2% to 3%. As a reminder, the agency has also changed its GDP forecast for 2017 last month - from 2.9% to 3.2%. Not bad. Moody’s justifies its move by the positive dynamics of the local labor market and stronger external demand. They also expect that investments (which dragged GDP down in 2016 to its lowest level in 3 years - 2.7%) will increase thanks to the usage of EU funds. Of course, there are still many risks ahead, mainly in the fiscal area. Those are long term fundamental views, so let’s focus on what is happening on the charts.

After testing the resistance of 4.28 the previous week, the EUR/PLN reacted to the “Macron effect” and it is heading towards the support of 4.21. If this level is broken, PLN bulls will target 4.18 and possibly even 4.15 in the next couple of weeks. The stochastic oscillator though, is showing the market is oversold and that we should expect a rebound. If so, the market will be targeting 4.25.

Pic.1 EURPLN-ECN D1 Source: MT4 Supreme Edition, Admiral Markets

The USD/PLN experienced a much stronger move. It opened on Monday at the support level of 3.89 and it broke it throughout the course of the week. The probable scenario is for the market to test the current local support of 3.85 and if this is surpassed, the target will be 3.80. The stochastic oscillator is also (as with the EUR/PLN) showing the market is overbought but for an upward move, the resistance of 3.89 needs to be broken.

Pic.2 USDPLN-ECN D1 Source: MT4 Supreme Edition, Admiral Markets

Author

Adam Narczewski

Independent Analyst

Independent analyst and trader. Adam holds the CFA (Chartered Financial Analyst) and the PRM (Professional Risk Manager) titles.

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