EUR/HUF Trades Marginally Lower Ahead of Expected Effective Rate Cut

EUR/HUF saw a slight downtick ahead of the NBH rate decision but some of those losses have since been pared with the cross now just 0.13% in the red at the time of typing. The decision on the effective rate, which is expected to be cut by 100bps to 16%, will be announced alongside the policy statement which is usually released 1 hour following the announcement on the base rate. Sell-side analysts expect NBH officials to strike a cautious tone regarding future policy decisions in both the policy statement and post-rate presser given recent HUF weakness.

• While the EUR/HUF trend condition remains bearish, the cross continues to trade above the 50-day EMA, suggesting scope for an extension higher to the next key resistance at 378.79, the May 19 high. On the downside, key support and the bear trigger is seen at 367.59, the Jun 12 low.