The EUR/USD currency pair experienced a decline in momentum, settling around 1.0835 during the early European session on Monday. Concurrently, gold prices displayed a sideways consolidative movement during the Asian session. Meanwhile, Central and Eastern European (CEE) currencies maintained their strength throughout the week, reflecting regional economic resilience. In Hungary, the EURHUF dropped below 400, influenced by the new central bank leadership's stance against monetary easing. The USD continues to hover near a multi-month low, providing support for the XAU/USD pair.
In Poland, February's inflation remained elevated above 5%, influencing financial markets. Bond yields offered by Poland were 25-35 basis points higher compared to Croatia's recent bond issuance, which sold EUR 3 billion through 2-year and 5-year bonds at yields of 2.65% and 3.05%, respectively. Slovakia's debt agency successfully issued EUR 500 million worth of retail bonds, with maturities of 2 years and 4 years, yielding 3% and 3.3%. Poland's currency, the EURPLN, reached a low of 4.15 amid these developments.
Economic Stability Across CEE Regions
The Polish central bank is expected to maintain its key policy rate unchanged, reflecting a cautious approach amidst high inflation levels. In contrast, inflation rates in Hungary and Slovakia are anticipated to decrease, providing some relief to these economies. Consumer price inflation started strong in 2025 but showed signs of cooling in February, indicating potential stabilization in price pressures.
Economic data releases are anticipated from several CEE countries. Slovenia, Slovakia, Romania, and Czechia are set to reveal industrial output growth figures for January, offering insights into the manufacturing sector's performance. Additionally, trade data from Slovakia, Czechia, Romania, and Serbia will shed light on the region's export and import activities. Wage growth statistics from Slovakia and Romania are also forthcoming, which will provide further context on economic conditions and labor market dynamics.
Germany's Fiscal Strategy Sparks Market Reactions
In an unexpected turn, the announcement by Germany's new political leadership to relax fiscal rules and establish a EUR 500 billion fund for infrastructure projects and military expenses has been perceived as a significant shift. This move is expected to have profound implications for the European economy, influencing market sentiment and investment strategies across the region.
The EUR/USD pair's momentum loss can be attributed to this evolving fiscal landscape and its potential impact on currency valuations. Meanwhile, gold's price consolidation reflects investor caution amid fluctuating market conditions. The USD's prolonged weakness continues to support gold prices, as investors seek safety amidst economic uncertainty.
Upcoming Data Releases and Market Outlook
As the week unfolds, markets will be closely monitoring upcoming data releases to gauge economic trajectories further. The release of industrial output growth figures will be crucial for understanding the strength of manufacturing sectors in key CEE countries. Trade data will offer a glimpse into international trade dynamics, while wage growth reports will highlight labor market conditions.
Investors remain vigilant as they navigate through these economic developments, with currency markets likely to respond to emerging trends and fiscal policies. The resilience of CEE currencies underscores regional stability amid global economic fluctuations. In contrast, Germany's fiscal policy shift represents a potential game-changer for the broader European economic landscape.