Changes on the currency market: euro (EUR / PLN) and dollar (USD / PLN) exchange rates ahead of a sharp decline? EUR / USD before the break? – take a look at FOREX data and forecasts

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The return of domestic investors, the correction of a strong market reaction to the higher than expected US CPI inflation, Friday’s better than consensus GDP data from Poland, or the morning statements of the President of the National Bank of Poland supporting expectations for interest rate hikes in December and indications of technical analysis are the arguments that in our the assessment will determine the decline in EUR / PLN in the coming days.

Changes on the currency market: the euro (EUR / PLN), dollar (USD? PLN) exchange rate up!  EUR / USD before the break?  - take a look at FOREX data and forecasts - 1

Although it should not be strong (a drop in quotations around 4.60 would be the end of the current possibilities), it would ensure a distance from the significant barrier 4.6328, the effective breakthrough of which opens the way to an attack on a pandemic peak located approximately four cents higher. The recommendations of foreign institutions, assuming the strengthening of the Polish currency, may also be helpful in strengthening the zloty.

Much will depend on the external sentiment, but the potential for dollar appreciation this week (favoring zloty depreciation) is relatively small. The EUR / USD move made last week was solid and the next few days do not contain releases significant enough to give the global markets significant volatility.

Changes on the currency market: the euro (EUR / PLN), dollar (USD? PLN) exchange rate up!  EUR / USD before the break?  - take a look at FOREX data and forecasts - 2

The technical picture of the EUR / USD exchange rate still suggests a decline in quotations (especially after breaking the 1.1510 barrier), although we hope that in the coming days the eurodollar will concentrate around 1.1430, waiting for new impulses. However, in our opinion, there may not be enough of them in the coming days.

Changes on the currency market: the euro (EUR / PLN), dollar (USD? PLN) exchange rate up!  EUR / USD before the break?  - take a look at FOREX data and forecasts - 3

The calendar does not contain items significant enough to stimulate the markets (data on US retail sales or industrial production should not work like this), hence we forecast stabilization of the dollar against the euro in the coming days. Market expectations assuming next year interest rate hikes are so aggressive that in our opinion hawkish comments from Fed members would be required to continue them. We would not count on these at the moment.

The market is focused on assessing whether L. Brainard has a chance to replace J. Powell in the chair of Fed president.

Our expectations – the bond market

10Y DE (%)

Our expectations regarding the Bund yield this week assume its further stabilization, motivated by the lack of new impulses. However, a lot will depend on the current sentiment. This one remains conducive to the overestimation of safer assets. For now, however, this condition affects the American debt to a greater extent, where the expectations of changes in US interest rates next year are re-winding up.

Changes on the currency market: the euro (EUR / PLN), dollar (USD? PLN) exchange rate up!  EUR / USD before the break?  - take a look at FOREX data and forecasts - 4

10Y US (%)

The US bond market has already discounted many potential factors influencing changes in Treasuries prices, but the recent data on significantly higher than expected CPI inflation strengthened expectations for faster rate hikes in the US than the official Fed message. The coming days may bring further, albeit slight, increases in profitability, echoing last week’s changes. We assess the impact of this week’s macro data on the valuation of Treasuries as slight.

Changes on the currency market: the euro (EUR / PLN), dollar (USD? PLN) exchange rate up!  EUR / USD before the break?  - take a look at the FOREX data and forecasts - 5


About Eric Wilson

The variety offered by video games never ceases to amaze him. He loves OutRun's drifting as well as the contemplative walks of Dear Esther. Immersing himself in other worlds is an incomparable feeling for him: he understood it by playing for the first time in Shenmue.

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