On the first trading session of 2025, the EUR/USD pair broke below last year’s lows, signaling a strong start for the dollar. Stock markets around the world welcomed the new year with optimism, while the Polish złoty held a steady position despite weak industrial data.
The Year of the Dollar
Many analysts had predicted that 2025, or at least its early months, would belong to the dollar. These forecasts were quickly validated as EUR/USD broke through its support level set at last year’s lows. From a technical perspective, this movement supports a scenario where the pair could test parity as early as January. The target range for this breakout could bring EUR/USD down to around 0.955 USD, the September 2022 low.
Several dollar-positive factors are at play this month, including Donald Trump’s assumption of the presidency and diverging monetary policies between central banks. While markets speculate on the extent of ECB rate cuts, the baseline scenario assumes that the Federal Reserve will hold off on further rate cuts at its January meeting.
PMI and NBP Surveys Impact the Złoty
Locally, the session was dominated by statistical surveys. Poland’s PMI for manufacturing fell by 0.7 points to 48.2, reflecting ongoing contraction. Analysts noted some silver linings, such as the slowest decline in new orders in a year, but the overall reading remains negative. Employment continues to show resilience, but production and inventory levels are falling, suggesting no immediate recovery. Polish manufacturing has now been in contraction for 32 months, last expanding in April 2022.
The National Bank of Poland (NBP) also released its annual survey of 23 leading financial analysts on key economic parameters. GDP growth for 2024 was lower than expected, and projections for 2025 are cautious, with an expected growth rate of 3.3% (unchanged for 2026). Only the most optimistic analysts foresee a 4% growth rate, a figure once considered standard.
Inflation forecasts are intriguing, with analysts beginning to align with NBP President Adam Glapiński’s narrative. While the inflation projection for 2025 remains at 4.3%, the 2026 forecast has been revised upward by 20 basis points to 3.3%. This reflects a unique approach by Poland’s central bank, which appears to anchor inflation expectations higher—a departure from traditional strategies.
Złoty Holds Middle Ground
With some major markets still closed for the holiday (e.g., Switzerland, New Zealand, and Japan), the Polish złoty maintained a balanced position. The Japanese yen and New Zealand dollar ranked among the strongest currencies today, alongside the US dollar.
Conversely, the euro and British pound weakened, both broadly and against the złoty. The pound dropped below 5.15 PLN, while the euro briefly touched 4.265 PLN before recovering some losses. The Swiss franc rose modestly to 4.561 PLN, and the US dollar saw the most significant increase, reaching 4.14 PLN.
Positive Start for Stock Markets
The start of the year was also favorable for equity markets, with most major indices posting gains. Poland’s WIG-20 index rose by nearly 1%, reflecting optimism in the domestic market.
Conclusion
The first day of 2025 has set the stage for a dynamic year in financial markets. While the dollar asserts its strength, uncertainties surrounding central bank policies and economic growth remain pivotal factors to watch.
Author: Krzysztof Adamczak, Currency Analyst, Walutomat.pl
Source: Manager Plus
