The current market bias for the USD to CZK exchange rate is bearish.
Three key drivers include a likely decline in the USD as the Federal Reserve plans to implement multiple rate cuts over the next year. Meanwhile, the Czech National Bank anticipates a stable exchange rate with a slight appreciation of the koruna, reflecting a positive outlook for the CZK. Additionally, easing inflationary pressures in the Czech Republic support this strengthening of the koruna.
The USD/CZK is expected to trade within a stable range in the near term, aligned with the current highs near 20.87. This range indicates limited volatility, reflecting the recent 3.3% trading band from 20.58 to 21.25.
A potential upside risk for the USD could arise if global economic growth outpaces expectations, creating demand for the dollar. Conversely, a downside risk remains if ASEAN's shift away from the USD gains momentum more quickly than anticipated, impacting its global standing.
