I just finished talking with my Polish neighbor again about currencies, and he still warns me about the złoty. Of course, geopolitics is tense, but when I look at the numbers, the story with the euro/zloty pair is much more nuanced.

Let me briefly explain why this currency pair is interesting: Poland has been a member of the EU since 2004 but has not yet adopted the euro. This means we can still trade euro/zloty as long as that’s the case. In early October 2025, the rate was about 4.27 PLN per euro. Historically, the pair usually hovers around the 4 mark, except during major crises.

This is where it gets interesting: After the Ukraine war, the euro initially rose significantly, but for about three years now, it has been falling again against the zloty. This is not coincidental. Poland’s economy is performing much better than many think. GDP growth is estimated at 3.5 percent for 2025 and 2026. The unemployment rate is only 3.1 percent. For comparison: in the eurozone, it’s 6.2 percent. That’s a big difference.

Poland also currently has the better position regarding interest rates. The Polish key interest rate is at 4.75 percent, while the ECB offers only 2.0 percent. Higher interest rates attract foreign investors and strengthen the currency. This partly explains why the złoty has recently appreciated.

Inflation looks more mixed. Poland had an inflation rate of 3.7 percent in 2024, while the eurozone was only 2.4 percent. For 2025 and 2026, it’s expected that both regions will lower their inflation rates, but the eurozone remains well below Polish figures. This could favor the euro in the medium term.

The political situation in Poland has stabilized. The new government under Donald Tusk enjoys broad support. That’s important for investors. In the 2024 EU elections, euroskeptic parties gained ground, but a pro-European majority was maintained.

From a technical perspective, the euro/zloty chart looks mixed. After years of decline, there have been small euro appreciations since March 2025. The rate has bounced off significant lows several times. This could signal a trend reversal, but it’s not certain.

Analysts are divided. Some expect movements toward 4.20 EUR/PLN, others see values up to 4.44 EUR/PLN by the end of 2026. Erste Group forecasts 4.30 EUR/PLN for 2026. My assessment: the euro/zloty pair will move sideways, with slight upward pressure. This is supported by Poland’s stronger fundamental data, but countered by higher inflation and increased government debt (over 416 billion euros in Q2 2025).

The war in Ukraine affects both countries, but more so Poland as a direct neighbor. Millions of Ukrainian refugees strain household budgets, but about 70 percent of the working-age Ukrainian refugees work in Poland, which reduces the economic burden.

For traders, this means: the euro/zloty pair isn’t spectacular, but it offers interesting setups. The daily ranges are moderate, allowing for relaxed trading. During sideways movements, traders can go long at lows or use a carry trade strategy because the interest rate differential is attractive.

My conclusion: I can’t quite agree with my Polish neighbor. The złoty has performed better than his pessimism suggests. The higher interest rates, strong GDP growth, and low unemployment rate point to further appreciation. But higher inflation and geopolitical risks are real factors. As a trader, you should stay cautious and watch technical signals closely. The euro/zloty pair is suitable for long-term positions and interesting conversations with Polish friends alike.