EUR/HUF Extends Weekly Gains to 1.2% Ahead of Fed

EURHUF has extended this week’s recovery, up 0.15% today and 1.2% higher compared to Friday’s close. Volatility in the Japanese yen post-BOJ has been the focus for markets today, with its rally potentially accounting for broader weakness in emerging market currencies as popular carry trades continue to unwind. Indeed, the Hungarian forint sits 1.6% lower compared to the Japanese yen, at levels not seen since March.

• For EURHUF, a continuation higher would pave the way for 398.85, the Jun 14 high and a key resistance. Clearance of this level would signal scope for a climb towards 399.75, the Mar 12 high and a key medium-term resistance.
• In most recent trade, the brief dip in the USD index on the back of the US data did not shift the needle for EURHUF. Meanwhile, the solid bounce in equities off yesterday’s lows has failed to offer the forint any reprieve.
• Yesterday, disappointing Q2 growth figures accounted for HUF underperformance, with data showing Hungary’s economy unexpectedly contracted by 0.2% compared to the previous quarter. Commenting on the data, Finance Minister Varga said Germany's struggles has dragged Hungary down, with the minister expressing hope that the second half of the year will see Germany returning to economic growth.
• Looking ahead, the Fed rate decision this evening will be closely watched with immediate attention on any signals about rate cuts beginning in September.