USD/PLN spikes on Russian drone incursion, risk-off sentiment grows

USD/PLN surged 0.8% to 3.9250 as Polish military forces engaged a Russian drone incursion, triggering immediate risk-off flows in Eastern European currencies. The zloty weakened sharply against major currencies as traders sought safe-haven assets amid escalating regional tensions. Poland's military confirmed deploying defensive weapons systems, marking a significant escalation in cross-border incidents. The incident has pressured other CEE currencies, with USD/CZK and USD/HUF rising 0.5% and 0.6% respectively. Technical indicators show USD/PLN breaking above the 3.9200 resistance level, with momentum indicators suggesting further upside potential toward 3.9500. Risk sentiment remains fragile across European markets, with EUR/USD dipping 0.2% as geopolitical concerns overshadow economic fundamentals. Traders are monitoring NATO response and any further military developments that could drive additional zloty weakness.