The current market bias for the EUR to HUF exchange rate is range-bound.
Key drivers influencing this trend include:
- A favorable interest rate differential is supporting the euro, as the European Central Bank maintains a flexible monetary policy while Hungary's central bank faces inflation challenges.
- Economic growth projections for the Eurozone, with an expected GDP increase of 1.6% driven by fiscal measures, bolster the euro's outlook.
- The Hungarian Forint's recent appreciation is attributed to disciplined monetary policy from the Hungarian National Bank, yet fiscal pressures loom ahead of the elections.
The near-term trading range is likely to remain stable around current levels, reflecting recent movements. An upside risk could stem from stronger-than-expected Eurozone economic data, while a downside risk may arise if Hungary’s inflation worsens, prompting tighter monetary policy that affects the Forint's value.