EUR/CZK Sinks Deeper Into Oversold Territory As 200-DMA Gives Way

EUR/CZK remains on a short-term downtrend after closing below its 200-DMA for the first time since mid-July 2023. Local headline flow has provided little in the way of outright price catalysts, largely focusing on the coverage of yesterday's assassination attempt on Slovak Prime Minister Robert Fico. When this is being typed, EUR/CZK trades -0.072 at 24.657, printing its worst levels in four months. This continued sell-off prompts the RSI to sink deeper into oversold territory, last sitting at 23.5, which indicates some potential for a corrective rebound soon.

• In terms of specific technical levels, the next stop for bears is 24.458, which limited losses on Jan 8. Bulls look for a return above the 200-DMA (24.757) and a move towards the nearby round figure (25.000) and the 100-DMA (25.095).
• The koruna outperforms its CE3 peers PLN (PLN/CZK -0.3%) and HUF (CZK/HUF +0.3%). USD/CZK also breached its 200-DMA, hitting new four-month lows.
• CZGB yields are a tad higher across the curve, apparently taking their cue from the move in German FI and diverging from regional peers (POLGBs & HUGBs).
• Yesterday's in-line US CPI data coupled with comments from CNB Monetary Department Director Petr Kral from earlier this week may have helped counter a moderation in CNB rate cut bets inspired by a larger-than-expected resurgence in Czech inflation. CTK cited Purple Trading's Jaroslav Tupy as noting that Kral was seemingly trying to alleviate concerns about a potential slowdown in Czech rate cuts.