EUR/CZK Outlook: Slightly weaker, but likely to move sideways, as the rate is below its recent average and near recent lows amid limited market drivers.
Key drivers:
• Rate gap: The European Central Bank is focusing on maintaining stable interest rates, while the Czech National Bank is keeping its repo rate steady, indicating a cautious approach to monetary policy that supports the koruna.
• Risk/commodities: With oil prices trading at recent highs, this may place pressure on the Eurozone’s energy-dependent economies, potentially impacting the euro's value against the koruna.
• One macro factor: The recent consumer confidence index from Germany may reveal improving morale, offering some support to the euro if the data is positive.
Range: Expect the EUR/CZK to hold within its recent 3-month range without significant directional moves.
What could change it:
• Upside risk: A notable improvement in Germany's consumer confidence could lead to a stronger euro.
• Downside risk: Continued high oil prices could further pressure the euro, leading to potential weakness against the koruna.
