EUR/CZK Outlook:
EUR/CZK is slightly positive but likely to move sideways, as it is above its recent average yet lacks a clear driving factor. The rate is trading at 90-day highs just above the 3-month average.
Key drivers:
• Rate gap: The European Central Bank is grappling with high energy inflation and a weaker growth outlook, while the Czech National Bank maintains rates amid declining inflation.
• Risk/commodities: Rising oil prices, significantly higher than the average, increase costs and create risk for the euro, potentially affecting its performance against the koruna.
• One macro factor: Easing inflation in the Czech Republic may help strengthen the koruna relative to the euro, impacting the exchange rate.
Range:
Expect EUR/CZK to drift within its recent range, yet it might test recent highs.
What could change it:
• A significant drop in oil prices could boost the euro's strength.
• Any geopolitical escalation or energy shocks could further pressure the euro.
