Czech Koruna: Dovish CNB may weaken CZK against Euro - ING

ING strategist Frantisek Taborsky outlines a busy Central and Eastern Europe (CEE) data calendar but stresses that the Czech National Bank (CNB) meeting is the key event. He expects rates to stay at 3.75% with dovish guidance, contrasting with still-hawkish market pricing. ING sees further upside in EUR/CZK, looking for the pair to approach 24.300 around the meeting and potentially rise further if CNB rhetoric and US Dollar (USD) strength align.

Dovish CNB seen boosting EUR/CZK

"The Czech National Bank's upcoming decision will be the main regional event on Thursday. We expect no change in the 3.75% rate, with markets focused on policy guidance and any signals about the timing and pace of future rate moves. The week closes with Polish industrial production on Friday."

"Friday’s US inflation data offered some relief after higher global energy prices and a hawkish ECB outcome triggered a sell-off in CEE rates. However, the market remains more hawkish than our economists’ forecasts, and this is unlikely to change without a meaningful decline in global energy prices."

"The CNB should strike a dovish tone, helping to reduce rate hike expectations. We see further upside in EUR/CZK and expect the pair to approach Thursday’s meeting around 24.300, with scope to rise further if the CNB confirms its dovish stance and the US dollar strengthens."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)