EUR/CZK Outlook: The outlook for EUR/CZK is slightly positive, but likely to move sideways, as the rate is above its recent average yet lacks a clear driver.
Key drivers:
• The European Central Bank is expected to maintain its interest rates, which may limit the euro's upward potential compared to the stable Czech National Bank’s repo rate.
• Oil prices have surged, trading at recent highs, which can impact inflation pressures in the Eurozone and indirectly affect the euro's strength in the short term.
• The Czech economy is expected to grow, supported by domestic demand, which may help stabilize the koruna against external pressures.
Range: EUR/CZK is likely to drift within its recent 1.5% range as both currencies face mixed signals.
What could change it:
• An upside risk could arise if the Eurozone shows stronger-than-expected growth in its upcoming GDP figures.
• A downside risk may emerge if inflation in the Eurozone continues to decelerate, leading to further easing from the ECB.
