Dissipating Volatility Supportive Of Neutral Zloty View

Having gained some momentum over the course of February and March, the Polish zloty now appears to have run out of steam, trading within a PLN4.6000 - 4.2000/EUR band since the beginning of April. The unit is currently testing key resistance at PLN4.4500/EUR, a firm breach of which could set up further gains towards the stronger end of its horizontal trend channel at PLN4.2000/EUR. However, we stop short of calling for additional gains beyond this point. Moreover, we caution that while volatility across global financial markets has appeared to have died down somewhat as risk appetite has improved, CEE crisis risks in the form of banking sector ructions and EU peg devaluations could yet send the zloty reeling in the short term.

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