USD/HUF Outlook: Slightly weaker, but likely to move sideways as the rate is below its recent average and mid-range with no clear driver.
Key drivers:
• Rate gap: The Federal Reserve has kept interest rates steady, while Hungary's central bank maintains higher rates, creating a favorable gap for the HUF.
• Risk/commodities: The softening of U.S. retail sales suggests weaker consumer spending, impacting demand for USD.
• Economic outlook: Hungary's National Bank recently kept interest rates unchanged, indicating a cautious approach to managing inflation and financial stability.
Range: The USD/HUF is expected to drift within its recent range, without testing extremes, as both currencies are reacting to local and global factors.
What could change it:
• Upside risk: A surprising recovery in U.S. economic data could bolster the USD against the HUF.
• Downside risk: Continued geopolitical tensions could lead to further declines in the USD.
