USD/HUF Outlook: Likely to decrease, as the rate is currently below its recent average and near recent lows, pressured by inflationary concerns in Hungary.
Key drivers:
• Rate gap: The Federal Reserve is expected to cut rates, while Hungary's National Bank maintains a high base rate to combat inflation.
• Risk/commodities: The US dollar has faced weakening pressure from geopolitical tensions and a recent selloff, affecting its strength against the forint.
• One macro factor: Hungary's November inflation rate rose slightly less than expected, hinting at persistent inflation risks that may delay interest rate cuts.
Range: The USD/HUF is likely to drift lower within its recent range as current pressures dominate.
What could change it:
• Upside risk: A stronger-than-expected US economic data release that boosts the dollar.
• Downside risk: Further weakness in the US economy or heightened tensions that drive investors away from the dollar.
