EUR/PLN looks oversold at current levels – Danske Bank

Jakob Christensen, Chief Analyst at Danske Bank, noted the Polish Zloty seems to have appreciated too fast too soon in recent weeks.

Key Quotes

“The PLN has staged a slightly faster comeback than we thought in January. Part of the reason is the improvement in macro data but also a weaker momentum in the Trump reflation trade”.

“Our short-term (ST) model now suggests that the EUR/PLN is very oversold, estimating a fair value of 4.42. Our ST model should be treated with caution, but we nevertheless think that the macroeconomic improvement has been factored in and that political risk in Europe in relation to the upcoming French election will start to be a negative factor for the PLN”.

“Longer term we see possible pricing in of monetary tightening as positive for PLN. As a result, we expect the PLN to weaken slightly near term, forecasting the EUR/PLN at 4.32 (4.37 previously) in 1M, 4.34 in 3M, falling to 4.30 in 6M and 4.26 in 12M, respectively”.