Central European currencies await result of Fed meeting — TradingView News

Most central European currencies traded slightly lower on Tuesday, awaiting a U.S. Federal Reserve meeting which may influence the valuation of the dollar.

Traders were also keeping an eye on a Czech central bank policy announcement on Wednesday.

The Czech crown and Hungarian forint have fallen this year as their central banks cut rates in a continuing easing cycle though they have regained ground in the past week.

The Polish zloty, on the other hand, has strengthened since the start of the year as rates stay on hold though it has faded recently.

Analysts said markets were positioning themselves for the meeting of the U.S. Federal Reserve, with some assuming a slightly more hawkish scenario than the current communication and forecasts from Fed members.

The Fed is widely expected to keep rates where they are, although there is a degree of uncertainty over what policymakers might signal about the likely course of monetary policy stretching into 2025.

“The result is a strengthening dollar and rising U.S. bond yields. The consequences are also the weakening zloty – especially since the depreciation is supported by technical analysis – and cheaper Polish debt,” Bank Millennium analysts wrote in a report.

“We maintain our scenario that the EUR/PLN exchange rate correction will extend to the level of 4.3285. Breaking it depends on the outcome of the Fed meeting ending tomorrow.”

Poland’s zloty EURPLN was stable at 4.3190 per euro at 0928 GMT.

On Wednesday, the Czech National Bank (CNB) is expected to deliver another 50 basis point rate cut as a weaker-than-expected crown and lingering price pressures dampen thoughts of a quickening easing pace.

Easing policy in the region is cutting rate differentials as the Federal Reserve and European Central Bank have yet to lower their rates.

“In the rest of the week we expect a greater degree of volatility with the crown, and not only with regard to the CNB meeting, but also to Wednesday’s actions of the Fed,” analysts at Czech bank CSOB wrote in a note.

The crown EURCZK was a touch down at 25.2400 per euro, the Hungarian forint EURHUF off 0.2% at 395.3000 while Romania’s leu EURRON was stable at 4.9729 per euro.