USD/CZK Outlook: Slightly positive, but likely to move sideways, as the rate is near its recent average and lacks a clear driver.
Key drivers:
• Rate gap: The Federal Reserve's expected shift towards lower interest rates contrasts with the Czech National Bank's cautious stance on monetary policy, supporting the koruna.
• Risk/commodities: With recent tariff concerns weighing on the US dollar, investors might seek safer investments, which can boost the koruna's appeal.
• One macro factor: Continued strong economic growth in the Czech Republic, driven by domestic demand, reinforces the currency's stability.
Range: The USD/CZK rate is expected to hold within its recent range, drifting without a strong trend either way.
What could change it:
• Upside risk: A surprising decision from the Federal Reserve could boost the USD against the CZK.
• Downside risk: Further escalation in US tariff policies may increase pressure on the USD and bolster the CZK.
