HUF: EURHUF Approaches Key Resistance Despite Equity Relief Rally

An extension of the recovery across major equity indices has offered EMEA FX limited relief, with EURHUF a touch higher on the day, and notably above yesterday’s highs. Data this morning showed Hungary’s industrial production contracted 3.7% Y/Y in June, roughly in-line with expectations, though greater market focus will be placed on CPI figures released tomorrow morning (Est: +4.0% Y/Y; Prior: +3.7%).

• Equity dip buying has coincided with comments from BoJ Governor Uchida, who ruled out raising interest rates as long as the market is unstable. However, positive sentiment has not filtered through to the forint, despite a significant correction lower for the yen.
• EURHUF remains just shy of key resistance at 398.85, the Jun 14 high. While this level has been pierced recently, a clear break would reinforce a bullish theme and signal scope for a climb towards 399.75, the Mar 12 high and a key medium-term resistance.
• Meanwhile, weakness in the yen has prompted a solid move higher for HUF/JPY today, with the cross now over 4% higher compared to Monday’s lows.