Late evening trade on Tuesday did see the
Polish zloty return to EUR/PLN 3.82, but
the pair quickly came under pressure as
corrective action resumed across the entire
CE4 board on Wednesday morning. This
brought the zloty back to the 3.84 area, but
was not enough by far to support a break out
of the current trading range. Finance
minister Zyta Gilowska hit the headlines
briefly in the afternoon and indicated that
she expected the zloty to strengthen
moderately throughout 2007, but since this
is basically what the market is betting on at
the moment the comment went by almost
unnoticed.
The regional sentiment will continue to play
the leading role today, but we keep to our
view that it would take a much bigger move
from the zloty’s regional peers for the
EUR/PLN pair to move above the 3.84 - 3.85
resistance area. On top of this the data
calendar is thin for the rest of the week so it
looks as if nothing more than consolidation
(possibly closer to 3.82 EUR/PLN) is in store
for the zloty until the first batch of eco data
early next week.
The Technical picture of EUR/PLN is PLN
positive. The pair broke below the
uptrendline off low and below the neckline of
the double top with neckline at EUR/PLN
3.8530. As long as the latter holds (now as
resistance) the ST picture remains zloty
bullish. Next important level stands at 3.80
(May 2006 low) ahead of 3.75 (Febr. 06
low). Potential targets double top formation
at about EUR/PLN 3.71 and 3.59. Immediate
move lower in EUR/PLN may be difficult
because of overextended conditions.
EUR/PLN: Technical picture positive for
PLN.
(CSOB - Investment research)