EUR/CZK Rallies To Multi-Month Highs, RSI Moves Into Overbought Territory

The combination of soft EZ PMI data and recent CNB speak pointing to a more "hands-off" approach to FX matters have conspired against the koruna, keeping it under pressure as the session progressed.

• The koruna is the second-worst performer in the EMEA space, with only the Israeli shekel faring worse as domestic political developments outlined in our earlier bullets have boosted Israel's risk premium.
• EUR/CZK topped out at 24.187, its best level since Jan 2, piercing Mar 17 high of 24.137 in the process. Bulls look for further gains towards Dec 30, 2022 high/23.6% retracement of the 2020-2023 sell-off at 24.336/24.341.
• The pair operates above its 50-, 100- and 200-DMAs and above its upper 2.0% Bollinger band (24.058), while the RSI has crossed the 70 threshold to the upside. This suggests that the recent strong upswing might be overextended.
• In CEE FX space, PLN/CZK has confidently breached recent highs and soared to 5.4360, the highest point since May 2022. It last sits at 5.4268, with bulls setting their sights on May 11, 2022 high of 5.4534.
• Note that in the previous CZK update, we have mistakenly flagged Wednesday as the beginning of the CNB's blackout period. Per the official schedule, the media quarantine will start at 15:00CEST on Thursday (Jul 27).