Hungarian Forint: Holding firm against Euro below key resistance - Societe Generale

Societe Generale analysts predict the Hungarian central bank, Magyar Nemzeti Bank (MNB), will reduce interest rates by 25 basis points to 5.50% today. This move is driven by dovish July minutes and softer-than-expected inflation. EUR/HUF has retreated to approximately 362, after failing to surpass 368, with 359/358 identified as the first crucial support level.

A surprise hawkish stance could push the currency back towards 360, while breaking above the 200-day moving average near 371 would be required to reignite a broader recovery. In Central and Eastern Europe (CEE), the MNB is expected to implement its fourth 25bp rate cut this year, lowering the base rate to 5.50%. Dovish minutes from the July meeting and a July CPI lower than expected further support the possibility of additional rate cuts.

Experts anticipate inflation to reach 1.5% in 2026 and 2.4% in 2027, with policy easing to 5.00% by the end of 2026 and 4.00% by the end of 2027. The dovish outlook suggests that any hawkish reversal could see EUR/HUF move back to the 360 mark (the 100-day moving average). After creating an interim low of 348 in June, EUR/HUF has gradually rebounded.

The currency has faced strong resistance near the late-April peak of 368. However, a base formation is evident; yet, clear indications of significant upside are yet to materialize. The 200-day moving average, around 371, could act as short-term resistance; a break above this level would signal a potential extended rebound. The recent pivot low at 359/358 marks the initial support. A breach below this could reignite the broader downtrend.