EUR/PLN has broken 4.3200. Economists at ING analyze the pair’s outlook.

Full of hope for new gains

EUR/PLN touched 4.3000 briefly in December. Otherwise, it's a level last seen before Covid. We repeatedly mention long PLN positioning here, which is and will be a long-term problem for further PLN gains. 

On the other hand, the short end of the IRS curve is already at levels prior to September's surprise National Bank of Poland rate cut of 75 bps. This implies decent support for the currency compared to HUF and CZK. 

Thus, if the market doesn't fall for the false hope of rate cuts after Thursday's inflation print, we see this week as an opportunity to test 4.3000 again.