USD/PLN Outlook:
The USD/PLN is likely to increase as it is currently above its 90-day average and near recent highs. Stronger-than-expected US producer price inflation supports the dollar's firm position.
Key drivers:
• Rate gap: The Federal Reserve's interest rates are higher compared to Poland's National Bank rates, attracting more capital to the USD.
• Risk/commodities: Rising geopolitical tensions keep safe-haven assets like the USD supported, providing additional strength.
• Monetary policy outlook: The National Bank of Poland is expected to maintain steady rates, reducing the PLN's competitive edge.
Range:
The USD/PLN is likely to test the upper extremes of its recent 3-month range as it remains buoyant.
What could change it:
• Upside risk: Sustained strong US economic data could further enhance USD strength.
• Downside risk: Any major political instability in Poland could undermine PLN confidence, affecting the exchange rate.