PLN: EURPLN Probes October Lows But Remains in Relatively Narrow Range Overall
Cautious commentary from the NBP’s Maslowska and Wnorowski added to EURPLN headwinds during Wednesday’s session, with a surge higher across the major equity benchmarks and euro strength both assisting the zloty and its regional peers as well. The cross traded as much as ~0.3% lower, briefly piercing the 4.25 handle. A close around current levels would mark the weakest session in spot terms since August.
- For EURPLN, attention remains on key short-term support at 4.2230, the May 15 low. Clearance of this level would strengthen a bearish theme and initially expose the 4.2000 handle. However, more notable support is found at 4.1704, the 76.4% retracement level of the Feb 17 – Apr 16 price swing, which closely coincides with the start of the April rally. On the upside, key resistance to watch is 4.3102, the Apr 16 high. First resistance to monitor is 4.2761, the Aug 27 high.
Figure 1: EURPLN remains contained within narrow range, key technical levels intact
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EGBS: 10-year BTP/Bund Spread Testing 78bps
The 10-year BTP/Bund spread is testing the 78bps handle, with today’s 2.5bp tightening supported by positive risk sentiment (the S&P 500 index marked a fresh all-time high today, with EStoxx 50 index also up almost 1% intraday).
- The immediate downside target in the spread will be the August 13 close at 76.7bps, after which the 70bp handle will be in focus.
- Alongside the solid risk backdrop, September’s BTP/Bund narrowing has been supported by an ongoing pullback in EUR rates vol and relative political stability in Italy compared to the likes of France.
