EUR/HUF Outlook:
Bearish, as the rate is below its recent average and near recent lows, influenced by ongoing economic challenges in Hungary.
Key drivers:
• Rate gap: The ECB maintains a steady interest rate of 2%, while the MNB holds its rate at 6.5%, creating a wider gap that favors the euro.
• Risk/commodities: Oil prices are currently above their average, which may add pressure on Hungary’s economy, affecting the forint.
• One macro factor: Hungary's negative economic outlook has raised concerns about inflation and growth, impacting the strength of the forint.
Range:
The EUR/HUF is likely to drift within its recent range as it remains near recent lows.
What could change it:
• Upside risk: A surprise rate increase by the MNB could regain confidence in the forint.
• Downside risk: Continued inflationary pressures in Hungary could lead to further weakness in the forint.