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Inflation is now a major theme across the region, threatening the year-end central bank targets. Besides current risks stemming from escalating geopolitical tensions in the Middle East and North Africa and the prospective ECB rate hikes the evolution of electoral cycles in a number of countries in New Europe is another factor deserving close monitoring. In view of Serbia’s improving domestic macroeconomic backdrop and the NBS’s proactive policy stance we continue to favor short EUR/RSD positions, maintaining our earlier target of 98.40 in 3 to 6 months, from levels around 102, currently. In view of the zloty’s recent underperformance we close our previous EUR/PLN short (entry at 4.000-4.050) and take profits at the current levels near 4.020. On the other hand, we continue to favor our earlier short EUR/TRY recommendation with a target of 2.0.