After the Easter break the Hungarian forint begins a week, which will be poor on the domestic macro front, but will be finished with an eye-catching second round of the parliamentary elections. Moreover, Sunday’s vote will be followed by a regular interest-rate setting meeting of the Monetary Council. Hence in our view, most of the week external developments – especially in core bond and equity markets – will drive the market, while at the end of the week the market might get more nervous ahead of Sunday’s vote (though an election outcome seems to be more predictable now). Technically, the EUR/HUF pair hovers now in the 267 territory, after several attempts to break above the 268.0 resistance. It seems that this barrier works now well as the pair dipped bellow back the 268.0 level after the second round of the elections. Let us remind that an eventual break of this resistance would open the way to the 28-months low (269.50) and testing of the psychological 270.0 barrier would then become likely. Nevertheless, we do not expect EUR/HUF will set a new two-and-half years high today, unless there is severe sell-off in core bond markets.
(CSOB - Investment research)