Bias: The outlook for USD/CZK is bullish-to-range-bound, as the pair is currently above the 90-day average and in the upper half of the 3-month range.
Key drivers:
- Rate gap: The Federal Reserve's potential shift toward rate cuts contrasts with the Czech National Bank's cautious stance on monetary easing, supporting the koruna.
- Risk/commodities: The current volatility in oil prices might influence the dollar's strength, as the U.S. economy is sensitive to energy costs and geopolitical factors like recent airstrikes.
- One macro factor: The Czech economy is projected to grow steadily, driven by household consumption, which bolsters the koruna's position against the dollar.
Range: USD/CZK is likely to hold within its recent range as it approaches potential resistance levels, supported by recent USD strength.
What could change it:
- Upside risk: A stronger-than-expected U.S. labor report could further boost the dollar.
- Downside risk: A dovish tone from Federal Reserve officials in upcoming speeches could weaken the dollar's position.
