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HUF Sits Lower Amid Broader EM Underperformance

HUNGARY
HUF sits slightly weaker against G10, shrugging off any spillover buying resulting from modest EUR strength as well as the uptick in major equity indices. The move lower in HUF comes amid broader EM underperformance ahead of the US inflation report later today (EURPLN: +0.65%; EURCZK: +0.10%), as well as the ECB and FOMC rate decisions later this week.
  • Despite the uptick, the EUR/HUF outlook is unchanged and trend conditions remains bearish having traded to a fresh cycle low yesterday. Initial resistance at 373.58 – where the 50-day EMA intersects today – remains intact. Broadly, sell-side analysts see pullbacks in the HUF as corrective in nature, as the year's carry-led rally in currency has further room to run, despite near-term risk of rate cuts from the NBH.
  • The domestic data docket is thin this week, with market participants looking ahead to next week’s NBH rate-setting meeting.

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