Bias: The EUR/CZK is currently around its 90-day average and positioned in the middle of its 3-month range, suggesting a range-bound outlook.
Key drivers:
- Rate gap: The European Central Bank maintains a neutral policy stance, while the Czech National Bank has kept its repo rate elevated to manage inflationary pressures, reflecting contrasting monetary approaches.
- Risk/commodities: Oil prices are trending above their recent averages, which could bolster the Czech koruna as higher costs may influence economic dynamics across Europe.
- Economic growth: The Czech economy is projected to grow steadily, supported by robust domestic consumption, which could strengthen the koruna against the euro.
Range: The EUR/CZK is likely to remain stable, drifting within its recent 3-month range without testing extremes.
What could change it:
- Upside risk: A significant improvement in Eurozone economic data could strengthen the euro relative to the koruna.
- Downside risk: Continued geopolitical tensions or a sudden spike in energy prices could put downward pressure on the euro.
