Frantisek Taborsky at ING says lower US inflation and reduced Fed hike expectations bring relief to CEE FX, despite higher Oil and US–Iran tensions. He maintains a bullish view on the Czech koruna and Hungarian forint, expecting more gains in coming days. EUR/CZK is seen below 24.200, EUR/HUF lower within 350–360, while EUR/PLN is anchored around 4.330–4.340.

Koruna and forint seen gaining

"Yesterday, CEE FX saw a clash between higher oil prices and risk-off sentiment due to the escalation of the US-Iran conflict on the one hand and relief coming from lower US inflation on the other hand. We could see new local lows across CEE currencies but also a strong rebound after the US inflation figures yesterday."

"The easing of Fed hike expectations, which may be just temporary, brings relief for CEE in our view for the coming days. We therefore maintain our bullish view of the koruna and forint and expect the next few days to bring more gains here."

"EUR/CZK should also be pushed down due to the hawkish Czech National Bank story locally and we could see levels below 24.200 again soon."

"EUR/HUF is trickier here due to the very long positioning already, but we still see a case for going lower within the current 350-360 range in our mindset, as investors see cheap levels for forint longs."

"EUR/PLN, on the other hand, does not see much reason to move down from current levels and we see 4.330-340 as an anchor for now."

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