Recent analysis of the EUR to HUF exchange rate indicates a complex interplay of factors that could shape its trajectory in the near term. Currently, the euro appears under pressure, recently trading at 90-day lows near 381.5 HUF, reflecting a decline of approximately 1.8% compared to its three-month average of 388.4. This slight depreciation is attributed to a combination of geopolitical uncertainty, primarily stemming from waning hopes for peace in Ukraine, along with softer-than-expected economic data from Germany, which has driven adjustments in expectations regarding the European Central Bank's (ECB) monetary policy.
The ECB recently raised interest rates to 4.0% but is expected to adopt a more dovish stance due to concerns about slowing economic growth. Market sentiment suggests that rates could be cut to 3.5% by late 2025, reducing the interest rate differential between the Eurozone and the U.S. It is essential to note that trends such as Hungary's decision to maintain the highest base interest rate in the EU at 6.5% can strengthen the HUF relative to the EUR, contributing to its recent appreciation. This environment has made the forint more attractive to investors, as seen with the recent rise to an 18-month high at 385 HUF per EUR.
Analyzing broader market conditions, the euro's value is also affected by global risk sentiment, with potential shifts due to oil price fluctuations. Currently, oil prices are approximately 2.5% below their three-month average, adding to the uncertainty. Should oil prices stabilize or increase, this could potentially bolster the euro if inflationary pressures persist, given oil's role in driving costs across economies.
Political developments significantly influence the outlook; for instance, Hungary's reluctance to adopt the euro amid criticisms of the EU's stability could impede the EUR's strength in relation to the HUF. Similarly, ongoing geopolitical tensions, particularly related to the Ukraine situation, may keep the euro under pressure.
Expectations for the EUR to HUF exchange rate will hinge on these multifaceted developments, including ECB monetary policy adjustments, Hungarian economic indicators, and the broader geopolitical landscape. Traders and businesses should closely monitor these factors as they may invoke further volatility and present opportunities or risks for international transactions involving these currencies.
