EUR/HUF Extends Bounce from Recent Cycle Low

The bounce in EUR/HUF off its recent cycle low has extended despite a continued uptick in global equities and softer greenback indicative of the broader improvement in market sentiment pre-Fed. The forint sits close to the bottom of the EM pile, with PLN/HUF a notable 1% higher on the day, putting the cross at its highest since May 24. Nevertheless, EUR/HUF trend conditions remain technically bearish, with resistance at 373.55, the 50-day EMA, unchallenged for now.

• Looking ahead, the FOMC rate decision today and ECB rate decision tomorrow are the key risk events while the NBH decision takes focus next week, with further easing of the Bank’s 17% effective rate expected. Despite the narrowing rate differentials, sell-side desks note that the rally in HUF may still have some room left to run as the HUF carry profile remains relatively attractive, for now. As such, the sell-side more broadly continue to view near-term HUF weakness as corrective in nature.