Newfound Rally Fuel for USD/PLN
- Disappointing Eurozone GDP Data
- Potential Channel Break in USD/PLN
- Confirmation Signal from US Dollar Index
Today’s Eurozone GDP data showed that the region is barely growing and that the Eurozone economy is actually likely to contract on a year-over-year basis. Not surprisingly, EURUSD is trading lower following the disappointing data, however, it also pays to look at other currency pairs that are closely tied to the performance of the euro (EUR) and are also highly liquid. One such example is the Polish zloty (PLN).
Poland’s exports accounted for 47.5% of the nation’s GDP in 2012, higher than the other large EU economies like France or the UK. However, 75% of Polish exports go to EU markets.
Usually, USDPLN moves in lockstep with EURUSD, only with a stronger magnitude. Now, following the disappointing Eurozone GDP data, a sizable correction higher is possible in USDPLN.
Prior to the release, the pair was trading in a descending channel formation, and we could well see a break to the upside.
Guest Commentary: Potential Channel Break in USD/PLN
Also, bear in mind that the Dow Jones FXCM US Dollar Index broke higher, taking out the top of a falling channel, so it's highly likely that USDPLN is poised to trade higher on both a short- and medium-term basis.
Guest Commentary: US Dollar Index Aims Higher, too
By Ariel Witulski, Guest Contributor, DailyFX.com
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.