ING analyst Frantisek Taborsky anticipates a cautious start to the month for Central and Eastern European foreign exchange markets, despite improving sentiment and a busy local data calendar [1]. The outlook is influenced by mixed headlines from the Middle East over the weekend, which are contributing to the cautious trading environment [1].
Recent sessions have seen a notable pullback in rate hike pricing for Poland and the Czech Republic, with expectations now down to around two hikes on average. In contrast, Hungary has seen easing expectations extend to nearly five cuts, indicating more scope for dovish moves in Hungary compared to its regional peers [1]. Taborsky notes that while there is still room for further dovish pricing in Hungary, the scope for additional hawkish repricing in Poland and the Czech Republic is limited, with around 1.5 hikes seen as a floor for the current rally [1].
Currency pairs EUR/PLN and EUR/CZK are trading near the lower ends of their recent ranges—4.225-260 for EUR/PLN and 24.260-360 for EUR/CZK—but neither pair currently offers a compelling stronger-conviction story, according to ING [1]. The Hungarian forint (HUF) remains favored, with EUR/HUF at a four-year low and 350 still the bank’s mid-year target for the pair [1]. ING expects any further gains in HUF to be gradual, given stretched long positioning, but positive momentum should persist [1].
CONCLUSION
ING’s analysis suggests a cautious but positive outlook for CEE FX, with Hungary’s forint expected to outperform and EUR/HUF targeted at 350 by mid-year. While Poland and the Czech Republic show limited scope for further hawkish repricing, Hungary has more room for dovish moves. Market momentum is expected to continue, but gains in HUF are likely to be gradual.