Czech crown dips to new lows as region sags

...across central Europe.

The crown traded as low as 28.275 to the euro before recovering to 28.200 at 1540 GMT, still down from 28.117 late on Friday.

"This is being driven by the region, there were some stop-losses when we broke the previous high (euro/crown) at 28.220," said Ceska Sporitelna trader Viktor Mikulecky.

"Technically, it seems that the top should be around 28.300, that is a level that should hold as this move seems to have been overdone."

He said a U.S. Fed meeting on Wednesday, as well as a range of U.S. data this week would be the key driver for the market.

The crown has been on the back foot since booking all-time highs of 27.410 in December and early January as sentiment towards the region soured and the crown increasingly becomes a funding currency due to a 100 basis point interest rate discount versus the euro zone.

The central bank confirmed a relatively dovish policy outlook last week when it lowered its inflation forecast and said it saw interest rates flat in the coming months ahead of a tightening. ----------------- MARKET SNAPSHOT AT 1540 GMT ----------------- Crown/euro last deals at 28.200 (-0.25 pct) Crown/dollar at 21.798 bid (-0.14 pct)

5-year yield due Oct 2010 3.44 pct bid (0 bps) 10-year yield due Jan 2016 3.87 pct bid (1 bps)

5-yr CZK/EUR mid yield spread -63 bps (vs -62) 10-yr CZK/EUR mid yield spread -25 bps (vs -24)

Current levels versus prior domestic close at 1500 GMT ----------------------------------------------------------------

[PRAGUE/Reuters/Finance.cz]