EUR/CZK Outlook: Slightly positive, but likely to move sideways due to the rate being just above its recent average and lacking a strong driver.
Key drivers:
• Rate gap: The European Central Bank has maintained a neutral policy, while the Czech National Bank remains cautious with a steady repo rate, supporting the koruna.
• Risk/commodities: Oil prices are trading above their average, which can influence inflation trends in the Eurozone and impact the euro.
• One macro factor: The growth forecast for the Czech economy is projected at 2.6%, driven by strong domestic demand, enhancing the koruna's stability.
Range: The EUR/CZK is likely to drift within its recent stable range, testing both ends as market conditions fluctuate.
What could change it:
• Upside risk: A stronger-than-expected German ZEW economic sentiment index could boost EUR demand.
• Downside risk: A significant escalation in geopolitical tensions or a shift in the eurozone inflation outlook could weaken the currency.