EUR/PLN to extend its decline towards the July low at 4.4910 – SocGen

EUR/PLN declined 0.8% on Tuesday, taking out the 200-day moving average at 4.5357 in the process. The pair is set to continue its downmove while below 4.55, according to economists at Société Générale.

How soon will the NBP tighten monetary policy?

“EUR/PLN faced stiff resistance near 4.6040 and evolved within a sideways price range. It has violated the lower band of this consolidation and has also breached a multi month ascending channel. This break denotes short-term momentum has turned negative.”

“Failure to cross above 4.5500, the 50% retracement of last bout of down move could result in further decline.”

“Next potential support levels are located at July low of 4.4910 and 4.4670.” 

“The NBP has four meetings left this year with the next MPC gathering in a week’s time on 8 September. Doves still dominate the narrative, so September will probably be too soon for a first rate increase. It should get more interesting in November when revised inflation and growth forecasts are published.” 

“Our house call for now is for the NBP to tighten 15bp 1Q22. Money markets are more aggressive and discount 20bp by the end of the year.”