Although the Central European currencies were just a little changed from a day ago on Wednesday, the forint and the koruna hit multi-week lows in intraday trading. Market jitters ahead of the naming of a new central bank governor (should be announced on Friday) undermined the forint while recent talks about possible market interventions have weighed on the koruna.
Regarding the koruna, it has so far failed to trade sustainably above resistance at EUR/CZK 25.635. However, the recent development in the euro-zone, more specifically, the result of Italian election and related in increase in risk aversion, certainly poses risks for the regional currencies including the koruna. We therefore revise our bets on strengthening of the Czech currency and we do not exclude further weakening in the short term. If the koruna breaches above mentioned resistance (at the time of writing of this report is trading at EUR/CZK 25.645), the next target is seen at the EUR/CZK 25.75 level.