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EUR/HUF Dips Below 380.00 Handle

HUNGARY

HUF is seeing some strength against the euro at the start of the session this morning, with the cross trading through yesterday’s lows and the 380.00 handle. Data released yesterday showed average gross wages rising by a hotter-than-expected 18.1% y/y in December (Est: +17.0%) versus +16.8% in November, which will keep pressure on inflation ahead of next week’s NBH meeting. The forint sits at the top of the CEEMEA FX scorecard (EURHUF: -0.20%, EURPLN: -0.03%, EURCZK: -0.01%).

  • Technical trend conditions in EURHUF remain bearish. 377.15, the Feb 14 low, marks immediate resistance. Below here, 370.55 marks the 76.4% Fibonacci retracement for the 2022 upleg. Initial resistance is at the 50-day EMA that intersects at 391.47, a clear break of which is required to signal scope for a stronger recovery.
  • Domestic yields sit approximately 10-13bps lower across the curve (though well within recent ranges), while the Budapest Stock Index trades 0.30% lower on the day.
  • The NBH rate decision takes focus next Tuesday. While the government say inflation peaked at 25.7% y/y in January, Deputy Governor Virag has emphasised that a “patient” approach is needed to tackle inflation – boosting odds that interest rates remain higher for longer.

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