Bias: Bullish-to-range-bound, as the USD is above the 90-day average and in the upper half of the 3-month range.
Key drivers:
- Rate gap: The U.S. Federal Reserve is expected to lower interest rates while the National Bank of Hungary maintains higher rates due to inflation concerns, which supports the USD.
- Risk/commodities: Oil prices have been trending lower, which typically benefits currencies like the HUF, but current volatility impacts overall currency stability.
- Inflation trends: Hungary’s inflation remains a concern despite being slightly below expectations, which could delay any interest rate cuts and affect the HUF negatively.
Range: The USD/HUF is likely to test recent highs while remaining stable within the 3-month range.
What could change it:
- Upside risk: A stronger-than-expected job market report in the U.S. could boost the USD further.
- Downside risk: Any dovish comments from Federal Reserve officials could weaken the USD.
