CZK: CEE Cross Remains Locked In Bullish Trend

PLN/CZK remains in a clear uptrend after forming a double-bottom pattern into 2Q2023, which was followed by a 50-DMA/200-DMA golden cross. The rate printed its best levels since mid-2022 as a result, when it spiked to CZK5.3956 last week. It has struggled to refresh cyclical highs since then, with the RSI flirting with the boundary of overbought territory.

• When this is being typed, PLN/CZK trades +31 pips at CZK5.3436. Should the rate clear the CZK5.4 figure, it would enter territory close to the 38.2% retracement of the 2020 - 2023 sell-off (CZK5.4339), which could provide a layer of resistance. Conversely, a break below trendline support at CZK5.2919 would draw bearish attention to a series of May intraday lows printed just above the CZK5.2 figure.
• The NBP's most recent monetary policy decision two weeks ago was interpreted as slightly dovish, as Governor Glapinski outlined the conditions for lowering interest rates. The CNB will deliver their rate decision tomorrow and may deploy more hawkish rhetoric than their Polish colleagues despite also keeping rates unchanged.