CZK: Strong Gains Result In Breach Of Key Resistance Level

Strong gains for the Zloty allow PLN/CZK to move firmly through key resistance from Mar 15 high of CZK5.1319 and a close above that level would mark the completion of a longer-term double bottom pattern. The rate climbed as high as to CZK5.1665 today and last trades +353 pips at CZK5.1600.

• The next technical levels of note are CZK5.2268/5.2275, which capped gains on Dec 23, 2022/Nov 30, 2022. Conversely, bears take note of the fact that the RSI has entered overbought territory and they will be on the lookout for its pullback coupled with a return under CZK5.1319, a tentative double-bottom neckline.
• Relative central bank dynamics are an obvious thing to watch in the coming days. The CNB will announce their monetary policy decision tomorrow, with the NBP set to follow a week after. Both are expected to keep interest rates unchanged, but any divergence in rhetoric will provide interest.
• Despite the strong performance of PLN/CZK (and the wider PLN) today, the latest round of comments from NBP officials pointed in the dovish direction, as talk of potential for discussing rate cuts by the end of 2023 resurfaced. Meanwhile, the CNB have recently struck more hawkish notes in their communications.