CEE FX: Regional currencies find support in relief – ING

24.300–24.350 is ING’s Frantisek Taborsky’s expected range for EUR/CZK. He sees lower CEE rates as US midterm results, a weaker US dollar and falling US Treasury yields add to the recent relief in EM and CEE assets sparked by US–Iran headlines and lower energy prices. EUR/PLN could consolidate around 4.410–4.420, with rate hikes already priced in and a dovish NBP maintaining pressure on the zloty.

Midterm Results, Energy Prices and Central Bank Policy

"The US midterm election results point to a scenario that is already well-priced, with limited implications for the EM and CEE regions at this stage. A weaker US dollar and lower 10-year Treasury yields should further support the general sense of relief seen in recent days, driven by headlines regarding US-Iran negotiations and lower energy prices."

"While the future trajectory of the conflict remains unclear following the midterms, the market currently signals a continuation of this relief. This should help push CEE rates lower and ease pressure on regional currencies."

"We anticipate that the CNB will hike interest rates tomorrow and present a new forecast."

"Consequently, the EUR/CZK pair should remain within the 24.300–24.350 range."

"In Poland, the National Bank of Poland is expected to keep interest rates unchanged at 3.75% today and will present a new forecast. Greater attention should be paid to tomorrow’s press conference, which is expected to provide further forward guidance."

"While some political relief yesterday may have reduced pressure on the zloty, our overall outlook remains bearish due to the NBP’s dovish stance. Given that a significant portion of rate hikes – roughly 75bp – has already been priced in, the EUR/PLN pair could stabilise within the 4.410-4.420 range."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)