EUR/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 European Central Bank has kept interest rates on hold, while the Czech National Bank maintains a higher rate, supporting the CZK.
• Risk/commodities: Oil prices are significantly above their average, which may affect European inflation and thus the euro's outlook indirectly.
• One macro factor: UBS has updated its EUR/CZK forecast, stating easing inflationary pressures and a robust domestic economy in the Czech Republic.
Range:
The EUR/CZK pair is likely to hold within its recent range, as neither currency shows strong directional momentum.
What could change it:
• Upside risk: A shift in ECB policy towards raising rates could strengthen the euro.
• Downside risk: Heightened political instability in the Eurozone may weigh on the euro's value.
