CEE FX: Bearish Theme Across CE3 FX Highlights Less-Benign Regional Sentiment

Lower US yields following the marginally weaker-than-expected US PCE data and subsequent (limited) dovish market reaction failed to offer CE3 FX any meaningful support. ING noted today that while lower US rates may help the EM FX environment in the near-term, they suspect that investors will be pursuing high-yield FX with less enthusiasm this summer, citing idiosyncratic risk factors in the emerging markets space. A full technical update can be found below:

• Bullish conditions in EURHUF remain intact and the cross is trading above its most recent lows. 395.73, 76.4% of the Mar 12 - May 28 bear leg, has been cleared, signaling scope for an extension towards 399.75 next, the Mar 12 high and a key resistance. Initial firm support is seen at 394.23, the 20-day EMA. 
• EURPLN traded lower last week and again earlier this week, extending the reversal from the Jun 14 high. The recent move down still appears to be a correction, however, the break of both the 20- and 50- day EMAs, does undermine the bullish theme, and signals scope for a deeper retracement, potentially towards 4.2791, 76.4% of the May 28 - Jun 14 rally. For bulls, a reversal higher would refocus attention on 4.3826, the Jun 14 high. 
• EURCZK has pulled back from post-CNB highs printed. Bears look for a return below the 200-DMA at 24.837 ahead of the Jun 7 low of 24.537. On the flip side, the 100-DMA at 25.087 marks initial resistance after the cross failed to consolidate above that average Thursday.