The Polish zloty has found some support, but EUR/PLN has continued to grind higher after pushing through the July and August highs at 4.34. The move has taken the pair towards 4.40–4.41, described as the upper edge of a multi-month ascending channel and a near-term resistance area; 4.34 is framed as key support, with a break below it seen as opening the way to a deeper pullback. If the cross clears 4.40–4.41, the next levels flagged are 4.45 and then 4.48.
The National Bank of Poland is expected to keep its policy rate unchanged at 3.75% at today’s meeting, after inflation rose above the top of its tolerance band, set at 4%, in September. Attention then turns to Governor Glapiński’s comments tomorrow, with the communication expected to focus on inflation risks and to condition markets for a possible rate increase in November, when updated staff forecasts are due. Even with a more hawkish tone, EUR/PLN is still projected to hold above 4.35 given geopolitical and external risks.
Monetary Policy Outlook And Market Volatility
We are closely watching the National Bank of Poland’s decision today, where we expect interest rates to hold at 3.75% despite September inflation creeping past the 4% threshold. This rate pause, combined with anticipation of a hawkish tone from the central bank’s governor tomorrow, prepares the ground for a potential rate hike in November. Derivative traders should prepare for heightened volatility in Polish Zloty (PLN) pairs as the market prices in these hawkish expectations.
Technical Levels, Trading Strategies, And Risk Factors
We see EUR/PLN testing critical resistance near the 4.40 to 4.41 level, which represents the upper boundary of a multi-month ascending channel. If the pair breaks above this ceiling, it opens the door for a stronger upward trend targeting 4.45 and eventually 4.48 in the coming weeks. For those trading options or futures, breakout strategies above 4.41 could offer compelling risk-to-reward setups.
On the downside, the previous August peak of 4.34 remains a pivotal support level that we believe will prevent any deep pullbacks for now. Only a sustained move below this 4.34 floor would signal a shift back to a stronger zloty and negate the current bullish setup for EUR/PLN. Traders should consider placing stop-loss orders just below this level to protect capital against unexpected hawkish surprises.
Geopolitical tensions in Eastern Europe and broader global market uncertainties continue to keep the zloty under pressure, making a drop below 4.35 unlikely in the near term. Historically, during periods of heightened regional risk, emerging market currencies like the zloty have depreciated by an average of 3% to 5% against the euro within short windows, reinforcing our cautious outlook. We recommend using volatility-based strategies, such as straddle options or wide-margin limit orders, to navigate the expected fluctuations over the next fortnight.
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