Koruna Edges Higher, Czechia's C/A Balance Comes In Better Than Forecast

EUR/CZK continues to operate just shy of the 76.4% retracement of the 2022 - 2023 downleg at 25.292 after the level capped its post-CNB upswing last week. The rate deals -0.016 at 25.225 and a clearance of that level would open up May 11 high of 25.486. On the flip side, bears see Jan 2 high of 24.867 as their initial target. A spell of consolidation would allow the pair to unwind overbought technical conditions, as it has only just returned below the upper Bollinger band, while the RSI remains above the 70 threshold.

• Data from the CNB showed that Czechia's current account surplus shrank to CZK13.24bn in December from CZK43.52bn prior, topping the +CZK3.20bn consensus forecast. This comes ahead of the release of Poland's December current account balance, which is expected to have flipped into a deficit for the first time since April 2023.
• PLN/CZK trades at 5.8415, a touch lower on the day but still close to recent cyclical highs, with the RSI flirting with overbought territory. The latest leg of the pair's bull run reflects divergent central bank expectations, fuelled last week as the CNB cut rates by 50bp (with a dovish dissenter vote) and the NBP remained on hold )with neutral guidance for the rest of the year).