Societe Generale analysts report that the EUR/HUF currency pair has extended its decline after failing to establish itself above the 200-day moving average in March, recently reaching an interim low near 360 [1]. The analysts expect the Magyar Nemzeti Bank (MNB) to keep its policy rate unchanged at 6.25% today, citing limited room for policy maneuver due to geopolitical risks and persistent oil prices, despite Hungarian headline CPI rebounding less than estimated to 1.8% year-over-year in March from 1.4% in February [1].
Technical analysis from Societe Generale highlights that the daily MACD for EUR/HUF is deep in negative territory, indicating a stretched downtrend with no visible signs of reversal at present [1]. Should a short-term rebound occur, the February low around 374 is expected to serve as initial resistance. However, if the 360 level fails to hold, the pair could see further declines toward 357 and 353 [1].
Looking ahead, Societe Generale projects medium-term appreciation for the Hungarian forint, targeting a EUR/HUF range of 340-350 as Hungarian risk premia compress. This outlook is supported by the exit of Prime Minister Orban and the absolute majority in favor of the TISZA party, which is expected to foster optimism regarding economic growth and the potential release of EU funds [1]. Additionally, Hungarian government bond yields and rates are anticipated to compress across the curve, particularly at the long end, as the risk premium reprices [1].
CONCLUSION
Societe Generale sees the EUR/HUF downtrend as extended, with further downside possible if the 360 level is breached. However, medium-term prospects are more positive, with expectations of forint appreciation as political and economic conditions improve. The MNB is anticipated to maintain its current policy rate, reflecting a cautious stance amid ongoing risks.