EURHUF Reverses Initial ECB-Inspired Dip

EURHUF initially dipped lower, alongside EURPLN and EURCZK, following the ECB decision. Despite the Bank hiking 25bps, “the Governing Council considers that the key ECB interest rates have reached levels that… will make a substantial contribution to the timely return of inflation to the target”, making for a dovish decision overall and alleviating concerns that favourable CEE rate-differentials will be further eroded.

• However, the dip lower quickly reversed, potentially due to headwinds from the downward revisions to Eurozone growth forecasts.
• At typing, EURHUF deals at pre-ECB levels having tested the day’s lows which are found in the 383.50 region. A break of the 50-day EMA further out at 382.60 would be a bearish development and expose 378.24, the Aug 30 low.