Forint Partially Recovers Some of Tuesday’s Losses

The forint is performing on firmer footing this morning compared to yesterday, with EURHUF down 0.25% at typing and having now pared roughly half of Tuesday’s gains. The local currency is outperforming its regional peers, as single currency strength as well lower US yields and a softer greenback provides a tailwind to the euro-proxies.

• PLNHUF closed below the 50-DMA last Friday for the first time since October. While the cross has pierced back above that average both yesterday and this morning, it has failed to close above it, signalling a bearish development.
• From a technical perspective, the recent move lower in EURHUF cancels a bullish theme and instead highlights potential for a deeper sell-off near-term. The breach of support at 378.22, the Dec 14 low, has exposed key support at 375.62, the Nov 14 low.
• The NBH publishes the minutes of its December meeting at 1300GMT/1400CET, during which policymakers decided to cut the base rate by 75bps to 10.75%. Our review of that decision can be found here.