CZK: Under Pressure In Between Central Bank Meetings

PLN/CZK continues to unwind its Feb 15 - Mar 15 upleg in the interim between the monetary policy decisions of the two regional central banks and last trades at CZK5.0158, back to unchanged on the day after bottoming out at CZK5.0074.

• From a technical point of view, a dip through Mar 6 low of CZK4.9678 would confirm that all-time lows printed in mid-Feb just shy of the CZK4.95 figure are in play. Conversely, bulls look for a rebound above Mar 28 high of CZK5.0826 and towards Mar 15 high of CZK5.1319.
• The CNB last week kept interest rates unchanged but doubled down on the importance of CZK strength as a tool for fighting inflation and pushed back against overdone rate-cut bets. See our full review here.
• The NBP are expected to keep interest rates unchanged tomorrow (preview here) but they have sounded less hawkish than their Czech colleagues, showing little concern about FX volatility, with some policymakers hoping for rate cuts by the year-end.
• 10-year POLGB/CZGB yield differential has widened today, but the broader picture remains more or less unchanged, with the spread refusing to stage any stronger recovery from recent cyclical lows.