USD/HUF Outlook: Bearish, as the rate is near 90-day lows and pressured by economic uncertainties in both the U.S. and Hungary.
Key drivers:
• Rate gap: The Federal Reserve's plans for future rate cuts contrast with the National Bank of Hungary maintaining higher rates to combat persistent inflation.
• Geopolitical tensions and economic concerns may undermine the dollar, especially amid ongoing issues related to tariffs and U.S. foreign policy.
• Hungary's core inflation remains elevated, potentially delaying any interest rate cuts, which puts pressure on the forint.
Range: The USD/HUF is likely to drift within the recent range as it is near 90-day lows, with limited volatility expected.
What could change it:
• Upside risk: Significant improvements in U.S. economic data, leading to reduced expectations for Fed rate cuts.
• Downside risk: Further escalation of geopolitical events or adverse economic indicators from Hungary, which could strengthen the forint additional against the dollar.
