The Czech koruna shot up yesterday, as it broke lower border of the former trading band at EUR/CZK 30.22 and jumped to EUR/CZK 30.12. The koruna initially traded mildly stronger at the EUR/CZK 30.25 zone. However, large euro-sell order from a German bank pushed the unit to a new 2-year high. The koruna only negligibly retreated from the high to close at EUR/CZK 30.17, well below the former trading band. There was obviously no particular reason for such aggressive price action, because no indicator nor statement was released. Moreover the development of the neighboring markets could have not inspired price action. Nevertheless, from the technical point of view the market was ready for such move, as trading band was shrinking and effort to push the koruna lower failed.
Today the calendar is empty again, thus traders will have enough time to consider whether the new level is appropriate. We expect the koruna may not give up yesterday’s gains, because mid-term prospect is positive for the currency.