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Koruna Extends Gains After CNB Decision

CZK

EUR/CZK has now retraced more than 76.4% of its Mar 1 - 17 upleg and last deals -0.047 at CZK23.516 after hawkish comments accompanying the CNB's on-hold monetary policy decision lent some fresh support to the Koruna.

  • Czechia's central bank said that bets on rate cuts by the end of this year are "premature," while Deputy Governor Frait stressed that policymakers "are not even thinking" about cuts at this moment.
  • The central bank's commitment to prevent excessive moves in the Koruna exchange rate (effectively a backstop against its depreciation) was maintained, while the Bank Board noted that the currency could be even stronger than it is now.
  • From a technical viewpoint, bearish focus is on a multi-year low printed on Mar 1 at CZK23.343. Conversely, bulls look for a rebound above Mar 28 high of CZK23.820 and towards Mar 17 high of CZK24.137.
  • CZGBs are slightly firmer across the curve, with a flattening impetus evident. The PX index has added ~1.4%, strengthening for the second consecutive day.

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