Wider Sentiment Drives Koruna Weakness

EUR/CZK is advancing as negative market sentiment applies pressure to EM FX space, although the koruna outperforms in CE3 peers (PLN/CZK -0.4%, CZK/HUF +0.6%). Today's move allows EUR/CZK to trim heavy losses registered last Friday on the back of hawkish CNB minutes.

• When this is being typed, EUR/CZK trades +0.074 at 24.138. Bullish trend conditions remain in force, following the recent formation of a "golden cross " pattern. Bulls look to challenge a recent resistance zone around the 24.30 figure. Bears could get some reprieve in the even of a move below the 200-DMA at 23.844
• Disappointing Chinese data, followed by a surprise rate cut, coupled with higher US yields create an unfavourable backdrop for EM currencies. Risk-off conditions in the EM space are exacerbated by an unscheduled rate hike in Russia and a currency devaluation in Argentina.
• Deutsche Bank wrote that in their view "CE3 currencies may come under pressure over H2 2023, while ING warned of possible USD strength this week, which may hurt CEE currencies.
• Czechia's data docket is empty today. July PPI figures will cross the wires tomorrow at 08:00BST/09:00CEST.