Hungarian Forint Holds Firm Against Euro Below Key Resistance - Societe Generale

EUR/HUF is currently at 362.0458, with the forint holding firm against the euro below key resistance. Societe Generale strategists expect the Hungarian central bank to cut its base rate by 25 basis points to 5.50% today, extending the easing path.

**Rate Cut Expectations and Inflation Backdrop**

According to Societe Generale analysis, the dovish July meeting minutes and lower-than-expected inflation leave room for further easing by the Hungarian central bank. The market is focused on whether today's decision will materialize as expected and whether the central bank's forward guidance remains tilted dovish. If the rate cut is delivered and forward guidance stays accommodative, the forint's yield advantage could narrow further, but the exchange rate remains technically supported in the near term.

**Technical Outlook: Consolidation Below Resistance**

Societe Generale previously noted that EUR/HUF extended its decline after failing to hold above the 200-day moving average in March, with a short-term low near the 360 level. The pair currently trades above that low, indicating the forint remains relatively firm below key resistance. If the 360 level is lost, SocGen sees downside targets at 357 and 353, respectively, while initial resistance on a rebound is near 374.

**Medium-Term Outlook**

SocGen strategists believe that as Hungary's risk premium contracts, EUR/HUF has room to appreciate toward the 340-350 range in the medium term. This view is tied to changes in Hungary's domestic political landscape and expectations for the release of EU funds. However, geopolitical risks and sticky oil prices could still constrain short-term policy room, and the pair's gains or losses at key levels will be an important signal for the subsequent direction.