EURHUF Trades 0.50% Softer Ahead of CPI Data Later This Week

Following last week’s post-NBH recovery, EURHUF is trading around half a percent weaker on Monday, briefly printing fresh session lows below 377.0. Moody’s made no decision on Hungary’s sovereign credit rating on Friday against expectations of an outlook downgrade in the footsteps of S&P and Fitch in January. The HUF advance is second to only the Israeli Shekel as the strongest CEEMEA currency with a moderately firmer Euro providing an additional tailwind for the Forint.

• EURHUF has fallen 0.50% at the time of typing, while its CE3 peers CZK and PLN are in the red against EUR. Technical EURHUF trend conditions remain bearish after the cross traded lower Wednesday. The recovery that followed is considered corrective. The focus is on 370.82, the 1.382 projection of the Oct 13 - Nov 10 - Dec 12 price swing. Initial resistance is at the 20-day EMA that intersects at 381.90.
• Looking ahead, CPI data is on the docket on Wednesday (Est: 25.4% y/y, Prior: 25.7% y/y). The central bank kept the key and effective rates unchanged at its latest meeting on the premise that inflation is likely to remain at its peak for some time before disinflation accelerates in Q2. Therefore, a softer inflation print may alleviate pressure to keep rates restrictive in order to support the economy which was confirmed to have fallen into a recession last week, and has since recorded a lower than expected 4.7% yearly fall in retail sales.