Polish Zloty Poised to Rally Further Against Euro

The Polish Zloty is expected to extend its gains against the Euro following the Federal Reserve's dovish surprise, which triggered a broad retreat in the US Dollar. According to ING, the ongoing Dollar squeeze and calmer geopolitical backdrop have left room for EUR/PLN to move lower.

ING notes that speculative long-Dollar exposure had reached its most stretched level since January 2025, leaving the market vulnerable to a sharper unwind. The bank estimates that 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.

The Polish Zloty has already benefited from the Dollar's decline, rallying alongside the Hungarian Forint after the FOMC decision. However, ING expects the Koruna to continue underperforming ahead of the Czech central bank meeting.