The Czech currency continued to hover in a tight range at the end of the last week. Ongoing weakness in the region kept the Czech currency under modest downward pressure, although the EUR/CZK 28.585 resistance was once again too strong to break. As concern a development on the domestic political front – there is nothing new, parliament is currently locked as both the forming center-right coalition and the other part of the political spectrum (Soc-dem and Communists) has 100 MPs.
Moreover, there is no sign that the key parties would be able to make a deal that would allow to establish any government. While the domestic calendar is empty, the Czech currency will definitely pay attention to a development in the Slovak Forex market. Continued weakness of the Slovak koruna might bring some negative spill-over effects for the Czech currency, nevertheless the EUR/CZK resistance should remain unbroken.
(CSOB - Investment research)