CZK25.00/EUR Next Key Level

Following the Czech koruna's record high of CZK25.77/EUR on January 15, the unit has since showed some sign of weakness, currently trading at CZK26.08/EUR. We believe that this is likely to be a temporary retracement, and as such the unit will continue making positive gains over the short and medium term. The strong appreciating trend channel, which has held for the last four years, supports further appreciation going forward. The potential for the dollar to bounce against the euro, may exert downward pressure on the koruna, although this is likely to be a temporary implication of short-term dollar strength. We believe that CZK25.00/EUR will be the next key support level to watch. A breach of this level would further reinforce our bullish outlook, and may precipitate a move towards CZK24.50/EUR.

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