Koruna Outperforms CE3 Peers Ahead Of CNB Monetary Policy Announcement

The Czech Koruna is the best performer in the CE3 space, even as EUR/CZK has moved away from its worst levels (CZK23.513). The pair last deals -0.026 at CZK23.569, while its overnight implied volatility printed best levels since April 4.

• PLN/CZK has shed 61 pips to last trade at CZK5.1490 but holds above the neckline of a double bottom pattern (CZK5.1319) completed yesterday on the back of a strong rally in the Zloty. A return under that neckline on a closing basis would invalidate that pattern, opening up scope for a deeper pullback. Meanwhile, bulls look for an attack on Dec 23, 2022/Nov 30, 2022 highs of CZK5.2268/5.2275.
• CZK/HUF gains for the second consecutive day and now changes hands +710 pips at HUF15.9538. A break above the 50-DMA/Apr 20 high at HUF16.1174/16.2278 is needed to give bulls some initial reprieve. Bears set their sights on yesterday's cyclical low of HUF15.7390,
• The CNB will announce its monetary policy decision in just over an hour. The central bank is almost universally expected to keep interest rates unchanged (see our preview here), albeit one local economist earlier this week called for a hike, with his piece doing the rounds in Czechia.