USD/PLN: Polish Zloty Braces For Deep Correction Against US Dollar

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The US Dollar (USD) looks set for a major rally against the Polish Zloty (PLN) after the recent bullish breakout through the daily triangle. The USD/PLN might test the 3.1574 resistance area in the near future as the sentiment remains extremely bullish due to Higher Low (HL) in the recent downward wave.

Technical Analysis

The pair is being traded near 3.0311 at 5:50 GMT in Asia. A support may be noted near 3.053, the intraday low of yesterday, ahead of 2.9984, the swing low of the previous wave. A break and daily closing below the 3.0000 handle could push the pair into deeper correction, validating a dip below the 2.9845 support area.

On the upside, the pair is likely to face a hurdle around 3.028, the high of yesterday, ahead of 3.0622, the swing high of the shooting star daily candle which emerged on the daily chart last month and then 3.1574 which is the high of 2014.

Poland Unemployment Rate

On Thursday, the Central Statistical Office of Poland (GUS) is due to release the unemployment rate report for the previous month. According to average forecast of different analysts, the rate of unemployment declined moderately to 13.7% in March as compared to 13.9% in the month before, better than expected actual outcome will be seen as bearish for USD/PLN and vice versa. Generally speaking, a higher unemployment figure is seen as a negative sign for the economy.

Retail Sales

Tomorrow the retail sales report of Poland is also scheduled for release. According to median projection of various economists, the retail sales rose by 7.15% in March as compared to 7.0% increase in the same month of the year before, downbeat actual figure will be seen as bullish for USD/PLN and vice versa.

US Jobless Claims

The labor department of the US is due to release the jobless claims report on Thursday. According to average forecast of various analysts, the number of people, who claimed jobless benefits last week, declined slightly to 303K as compared to 304K in the week before, better than expected actual outcome will be seen as bullish for USD/PLN and vice versa.

Consumer Sentiment

Reuters and the University of Michigan will release the joint consumer sentiment report of the US on Friday. According to median projection of experts, the consumer sentiment improved to 82.6 points in April as compared to 80.0 points in the month before. The report is prepared after thousands of surveys and questioners’ feedback, a better than expected actual outcome will be seen as bullish for USD/PLN and vice versa.

Conclusion

Keeping in view the overall fundamental outlook and strong recovery in the US during the recent past, buying the pair on dips appears to be a good strategy.

To contact the writer of this story: Usman Ahmed at usman@forexminute.com