Central and Eastern European currencies stayed under pressure, despite recent gains in the forint, zloty and koruna. Trading conditions were expected to be thinner because of a long weekend, with markets in the Czech Republic and Hungary closed on Friday.
Reduced liquidity and geopolitical uncertainty were expected to encourage lower risk-taking. EUR/PLN and EUR/CZK were still near local highs, despite the recent improvement in some regional currencies.
Turkey was set to publish March inflation on Friday, with month-on-month inflation forecast to slow from 3.0% to 2.2%. Year-on-year inflation was expected to rise from 31.5% to 32.2%.
These figures were expected to keep Central Bank of Turkey rate cuts off the table for the next few months. The outlook depended on clearer evidence about the effects of oil prices and domestic inflation pressures.
A partial reversal was expected after the recent EUR/HUF decline, with a return to 390 described as unlikely. The article was produced using an AI tool and reviewed by an editor.
Central and Eastern European currencies are facing renewed pressure, and any recent gains are likely temporary. We’re seeing the EUR/PLN cross moving back towards 4.35, a level that has historically signaled further weakness for the zloty. With holiday-thinned trading ahead, traders will likely reduce risk, which could amplify any negative moves.
The latest Turkish inflation figures for March 2026, which came in at a stubborn 45% year-over-year, reinforce a cautious stance. This high print ensures the Central Bank of Turkey will not consider rate cuts for the next several months, impacting regional sentiment. The persistent inflation reminds us that underlying price pressures in emerging markets remain a key risk factor.
This situation is very similar to what we observed in the spring of 2025 when a sudden geopolitical flare-up caused a rapid sell-off in the forint and koruna. Back then, those who were not hedged faced significant losses as liquidity dried up almost instantly. The current setup, with EUR/PLN and EUR/CZK near their recent highs, mirrors the conditions we saw just before that downturn.
For traders, this suggests it is prudent to protect against further currency weakness in the coming weeks. Buying out-of-the-money call options on EUR/PLN and EUR/HUF provides a cost-effective hedge against a sharp upward move. Implied volatility is still relatively contained, but it is unlikely to stay that way if geopolitical headlines worsen.
