USD/HUF Outlook:
The USD/HUF is likely to decrease as it trades 2.1% below its 90-day average and is near its recent lows. Currently, the market lacks significant positive drivers to support a turnaround.
Key drivers:
• Rate gap: The Federal Reserve's tight monetary policy contrasts with Hungary's unchanged interest rates, widening the rate differential that favors the USD.
• Risk/commodities: Ongoing geopolitical tensions keep investors leaning towards the USD as a safe haven, which could suppress the HUF.
• One macro factor: Hungary's increasing fiscal deficit projections raise concerns over debt sustainability, which may further pressure the forint.
Range:
The USD/HUF is likely to drift within its recent 3-month range, remaining near the lower end.
What could change it:
• Upside risk: A positive surprise from upcoming US economic data could strengthen the USD further.
• Downside risk: Any significant improvement in Hungary's economic outlook might help stabilize or boost the HUF.
