ING expects the Polish Zloty to extend its post-Fed advance, with the ongoing Dollar squeeze and calmer geopolitical backdrop leaving room for EUR/PLN to move lower.
The Euro to Polish Zloty exchange rate (EUR/PLN) was quoted around 4.3088 at the end of July, having traded between 4.3058 and 4.3149 during the latest session.
ING believes the Zloty has scope to strengthen further after the Federal Reserve’s dovish surprise triggered a broad retreat in the US Dollar and renewed demand for emerging-market currencies.
The Greenback’s decline accelerated after investors questioned whether the Fed would translate its inflation-fighting language into additional policy tightening. Softer US core inflation and weaker-than-expected second-quarter growth added to the move.
Positioning also played an important role. ING estimates that speculative long-Dollar exposure against other major currencies had reached its most stretched level since January 2025, leaving the market vulnerable to a sharper unwind.
According to the bank, “there may still be room for further USD long-squeezing”, with disappointing US data likely to prompt a larger dovish repricing than it would have before the Fed meeting.
That environment has proved supportive for Central and Eastern European currencies. ING notes that both the Polish Zloty and Hungarian Forint rallied after the FOMC decision, while the Czech Koruna lagged following softer domestic growth figures and a dovish shift in Czech rate expectations.
Poland’s inflation outlook remains an important domestic influence.
ING expected July inflation to rebound from 2.5% to 3.1%, largely because of the withdrawal of government measures that had previously limited fuel prices.
A firmer inflation reading could make near-term National Bank of Poland rate cuts more difficult to justify, providing additional yield support for the Zloty.
The bank also sees the absence of fresh escalation in the Middle East as constructive.
Lower immediate geopolitical risk encourages demand for higher-yielding currencies and reduces the defensive appeal of the Dollar.
ING said the Forint and Zloty “have more room to gain”, while expecting the Koruna to continue underperforming ahead of the Czech central bank meeting.
For EUR/PLN, that points to a continued downside bias from the 4.31 area.
The pace of any move is likely to depend on whether the Dollar selloff extends and whether Polish inflation restrains expectations for monetary easing.
Our currency coverage draws on live market data, official economic releases and published bank research.
Leave a comment