EUR/HUF drops to 2-day lows on hawkish MNB
- EUR/HUF breaches 360.00 post-MNB decision.
- The Hungarian central bank (MNB) hiked rates by 30bps.
The Hungarian forint leaves behind the earlier weakness and now drags EUR/HUF to the area of 2-day lows in the sub-360.00 region.
EUR/HUF weaker on MNB decision
EUR/HUF reverses two consecutive daily advances and slips back below the 360.00 mark after the MNB surprised markets by delivering a larger that expected interest rate hike at its meeting on Tuesday.
In fact, the central bank raised the policy rate by 30bps (vs. consensus for a 20bps hike) to 1.20%. It is worth recalling that the MNB already raised rates by 30bps back in June to 0.90%. That was the first move on rates since July 2020, when the advance of the pandemic forced the MNB to reduce rates to 0.60%.
Persistent high inflation in Hungary and prospects for a strong rebound in the domestic demand pari passu with the re-opening of the economy in the post-pandemic era prompted the MNB to intensify the hawkish message that was already in place since earlier in the year.
EUR/HUF relevant levels
At the moment the cross is losing 0.62% at 358.88 facing the next support at 358.16 (200-day SMA) followed by 356.92 (weekly low Jul.22) and finally 354.75 (weekly low Jul.12). On the other hand, a surpass of 362.41 (monthly high Jul.26) would expose 364.29 (monthly high Apr.23) and then 369.07 (2021 high Mar.18).
Author
Pablo Piovano
FXStreet
Born and bred in Argentina, Pablo has been carrying on with his passion for FX markets and trading since his first college years.
