Bias: Range-bound, as USD/HUF sits near the 90-day average, in the middle of the 3-month range, and near 30-day highs.
Key drivers:
- Rate gap: The US Federal Reserve is expected to cut rates toward a neutral stance in 2026, while Hungary’s central bank keeps the policy rate high as inflation remains above target. The divergence in policy paths tends to support a steady drift in USD/HUF rather than sharp moves.
- Inflation dynamics: Hungary’s inflation remains above target with core inflation rising, delaying any potential MNB rate cuts and keeping forint supported by real yields but vulnerable to shifts in external funding conditions.
Range: USD/HUF is likely to drift within the 3-month range, holding near the middle with little pressure to test extremes.
What could change it:
- Upside risk: hawkish Fed tone in upcoming speeches or stronger US payrolls data could lift the dollar.
- Downside risk: Hungary inflation cools and the central bank signals earlier rate cuts, narrowing the gap between policy rates.
