USD/CZK Outlook: Bearish, as the rate is below its 90-day average and trading near its recent lows.
Key drivers:
• The Federal Reserve is expected to cut rates in 2026, which may weaken the US dollar against the koruna.
• Brent Crude OIL/USD remains under pressure, which often impacts emerging markets like the Czech Republic, potentially supporting the koruna.
• The Czech National Bank's cautious approach to monetary policy and stable inflation expectations help maintain the koruna's strength.
Range: USD/CZK is likely to drift within its recent 3-month range, potentially testing the lower end due to ongoing pressures on the dollar.
What could change it:
• Upside risk: A stronger-than-expected US economic data release could spark renewed interest in the dollar.
• Downside risk: If geopolitical tensions escalate, particularly regarding US policies, the dollar could weaken further.
