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EURHUF Extends Gains, Briefly Piercing 392 Handle

HUF
EURHUF has extended higher throughout the session, with the cross recently piercing the 392.00 handle. Price action remains close to 391.64, the Aug 21 high, at typing. A more sustained break of this level would open 394.67, the Aug 3 high and a key resistance.
  • The forint rallied yesterday on the hawkish NBH policy statement and comments from Virag, though its gains were quickly reversed. The move today has had no notable headline driver, though weakness is noted in the Polish zloty and the South African rand.
  • Going forward, the pace of future rate cuts is likely to depend on the rate of HUF depreciation, and therefore developments in the US and Europe will be eyed given the sensitivity of the local currency to the Fed and ECB’s rate paths. Stabilisation of the forint could facilitate the continuation of regular cuts given benign inflation developments. A summary of sell-side views post yesterday’s decision can be found here.

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