EURPLN

EURPLN

Introduction to EUR/PLN

EUR/PLN is an abbreviation for the Euro against the Polish zloty. This euro is an exotic-cross currency pair. The Euro is the base currency in this set, and the PLN is the quote currency. This is the Forex quote for the Euro versus the Polish Zloty. Here, the value of one Euro is quoted in terms of the Polish Zloty.
The Zloty is a traditional Polish currency unit dating back to the Middle Ages, which is literally translated to ‘golden.’ Before the 2008 recession, the Zloty served as an ‘investment currency’ comparative to the Euro. The Western European investors began pulling money out of Poland in 2008. The Zloty lost more about a third of its value against the Euro in 2010. This currency pair is prevalent among traders and investors who desire stability in the behavior of currency pairs.

About EURPLN

The Euro is the official currency of 19 of the 27 member states of the European Union. The euro (EUR) is the second most traded currency in the world behind only the US Dollar. In March of 2013, with nearly 920 Billion Euro in circulation, the EUR became the most circulated currency in the world.

About PLN

The Zloty is Poland’s official currency and legal tender. Its sign is ZŁ and code, PLN. This is subdivided into 100 grosz (gr). The commonly accepted English version of the currency is the Polish Zloty which literally translates to ‘golden.’ The Polish zloty’s name comes from “zloto,” the Polish word for gold, and traces its existence back to the middle ages. It is the most traded currency in Central Europe and ranks 22nd on the foreign exchange market.

Historical Overview of the EUR/PLN

The EUR/PLN is a common currency pair on Forex. Poland is an active partner with the EU on trade. EUR/PLN is more preferred by most experienced traders. Those traders want the stability and predictability of the European and Poland economies. A very intense order on this financial instrument is seen through the European sessions.
 
The EUR/PLN pair is the cross rate against the U.S. dollar. Though the United States dollar apparently is absent in this currency pair, it has a major influence on the pair. Through linking EUR/USD and USD/PLN price charts, it is certain to get an approximate EUR/PLN chart.
 
The Euro and Zloty currencies are affected by the U.S. dollar, which is the reason it is better to observe the U.S. indices. The discount rate, GDP, unemployment, newly created offices, and others to appropriately forecast the next move of the pair. It is however pertinent to note that, some currency pairs can react differently to the changes observed in the U.S. economy. The EUR/PLN may be an exact indicator of these currencies.

What are the characteristics of the EURPLN pair?

This pair is a major/minor currency pair, its characteristics are similar to that of majors/minors.

  1. The spread is around 30 pips, which are lower compared to other exotic-cross currencies involving EUR as the base currency.
  2. The Euro and the Polish zloty are quite volatile. Experienced traders will be able to make good profits from an unstable rate.
  3. The volatility of this pair is pretty decent. It is neither too high nor too low.

VOLATILITY of EUR/PLN

The volatility of EUR / PLN, euro, and Polish zloty, is subject for defining the other currency pairs with zloty.
The currency pair EUR / PLN is based on the standard of a direct quotation. The base currency is EUR – euro and quoted – PLN, Polish zloty. The rise of the currency pair means the strengthening of the euro against the Polish zloty, that is to say, the buying of EUR needs more of the PLN. However, a decline in the exchange rate shows the strengthening of the PLN. With the existing exchange rate chart, you can observe the volatility of the currency pair in time. Still, the volatility of this pair is quite good. It is neither too high nor too low.
 
Trading the Euro – Zloty pair is very interesting, but not so easy, as it is considered by high volatility. This opens up both prospects for higher earnings, compared with less volatile pairs. It enhances the risk of losing the deposit if the rules of money management are not adhered to. As a rule, trade is limited to scalping.
The highest action of trading on the EUR/PLN pair is when the European and American are in trading sessions. And in the intervals between them, the trade practically freezes.
 

Tips for Trading EUR / PLN

  1. First, the trader should know that the spread is around 30 pips. They are quite lower when compared to other exotic-cross currencies that involve EUR as the base currency. Second, the volatility of this pair is neither too high nor too low.
  2. If the values in the min column are significant. It is not wise to trade this pair in low volatility but for one to have adequate volatility with low-costs. One could trade when the volatility is at the average values.
  3. Putting market orders through ‘limit’ and ‘stop’ will decrease the costs. Conversely, if you trade cross rates, bear in mind that brokers regularly set a higher spread on such kinds of pairs in comparison to the majors. Hence, before you begin trading with the cross rates, try to get familiar with the conditions given by the broker. Slippage on the trade will be annulled, and it will, on the same hand, reduce the total costs.

Correlations of the EUR / PLN pair

Correlations between currencies, which for a long while seemed reliable, have recently shown a tendency to break down. These breakdowns often occur at a period of wide-ranging economic stress, and the outcome is usually a dramatic one.
 
Liquidity in the Euro/Zloty currency pair is more, compared to some others, because this pair is highly correlated. Banks and other corporations can then use trades in the EUR/PLN as a proxy to border exposure in other currencies.
 
The PLN is clearly closely correlated with the EUR. One point to the lookout is that of the political situation in Poland, and the stages the country takes to joining the EUR.
 

How can one trade EUR/PLN?

  1. First, identify the profitable seasonal window. To know when to enter the market, is recommended.
  2. After identifying the profitable seasonal window, sell EUR/PLN on the closing price of the starting date on June 28 (22:59 CET).
  3. Identify the maximum loss within the seasonal period. Then, have a look at the daily chart and the ATR(14) indicator;
  4. If the maximum loss is above the ATR(14) reading, round it up to the next round number and use it as the worst-case-stop. b. If the maximum loss is below the ATR(14) reading, use the ATR(14) as your stop-width (rounded up to the next round number).
  5. Look at the average gain of the seasonal pattern, and place the take profit at this distance from your entry point.
  6. If the trade is not stopped out or it does not reach its take profit within the seasonal period, end the trade market on the closing price on July 04.
  7. The growth retardation in the economy of Germany expected led to the fact that the zloty continues to weaken against the background of the Euro-. But the trader needs to understand that this volatility is entirely predictable.
 
Together, these factors determine the ratio in the EUR/PLN cross. It is quite apparent that in the current situation, the zloty will continue to fall in price against the Euro. But this will happen in waves.

Spreads of the EUR / PLN pair

The EURPLN pair does not receive a lot of attention, still the movements can be pretty good. Spread is one of the things that scares some traders away. It is around 10 pips with a low-cost broker and with higher-priced brokers, up to 30 pips.
Though it may appear high, the currency pair often moves more than 250 pips a day. That is, for about 5 times more as the EUR/USD. Again, the targets for these trade situations are unevenly about 1,200 pips away from both consolidation breakout price. It makes the spread slightly inconsequential for a multi-month trade.
Additionally, you have to consider the pip value. A standard lot in the EUR/USD pair, a pip is worth 10 USD. In the EUR/PLN a pip is worth 2.64 USD for a standard lot, 0.26 USD for a mini lot, and 0.0026 USD on a micro lot. Adjust position size accordingly, based on pip value and the distance to the stop-loss price.

What is the most important economic news about EURPLN?

Economists at Nordea see the risk picture clearly skewed towards a higher EUR/PLN. As the global outlook remains uncertain but expects the zloty to strengthen in the long-term. The unexpected NBP rate cut could indicate that the central bank will counteract any PLN strengthening, per Nordea. “The zloty has been underpinned by global equity markets rallying and the dollar weakening. The correlations between EUR/PLN have not been as strong since mid-2018 – a pattern we expect to continue in the short-run. These factors have thus been more important for the PLN than the NBP’s surprising decision to slash rates by 50 bp to the (new) effective lower bound of 0.10%.”

What Factors affect the EURPLN Pair?

Some countries switched to the capitalist model of the economy much earlier than the rest of the Commonwealth.
This determined the factor that Germany, France, Italy are the most significant drivers of euro fluctuations. It is the economy of these countries that directly determines changes in currency quotes.
At the same time, the budget deficit of Eastern European countries leads to the fact that developed donors are forced to inject capital. Even in their production, but their immediate neighbors.
As a result, this led to the development of an economic crisis that has swept Europe since 2016. As a result, the EU economy in 2019 showed almost zero growth, which is a clear sign of a deep financial depression. 
Against this background, the European Central Bank is forced to take desperate measures. Sometimes it run counter to the expectations of experts or even common sense.
All this is because previously, unpopular trading pairs cause more and more interest from traders. This also applies to the EUR/PLN instrument.
Since Poland retained the national currency, its economy is not so much tied to the EU. Although it directly depends on trade relations with the Eurozone.
Nevertheless, the country actively is developed and frequently shows good economic results. It creates specific volatiles on the market, and it opens the commercial corridor for the traders.
 

FAQ's

A bearish seasonal pattern comes into play which developed over the last 17 years during the time span between June 28 and July 4.

There are a lot of fundamental reasons, the most important: expected growth rate, unemployment rate, inflation.
Zloty is a strong weakness of the dollar. It is one of the main drivers of strengthening polish currency.
 

The Eurozone has a 0% interest rate, and Poland has a 0.5% rate. Going long EURPLN will cost a small amount of swap each night, while going short will pay us a small amount. This will vary by broker.

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