The Hungarian Forex market experienced another calm session on Tuesday. The EUR/HUF pair oscillated in a tight range in the 251 zone. Like on Monday, market moving factors were simply missing and the only news government‘s approval of VAT on home care services, the renovation of private homes and small-scale repairs. According to government estimates this measure should reduce budget revenues by slightly more than HUF 15 bn. Although this sum is not insignificant, it is not huge so the calm market shrugged-off the information that the government wants to dick another (small) hole in the budget. Technically, it should be mentioned that EUR/HUF twice tested the 251.95 resistance, but failed to break it once again.
Nevertheless, during the off-shore trading EUR/HU suddenly spiked deep to the 252 area and this morning even tested 254.0 level. There was no clear market mover, which should declare the price action. One possible explanation could be contagion from Iceland as the high-yielding Icelandic currency totally lost ground yesterday, but it is just our hypothesis.
Given the deterioration of the market sentiment we might experience quite volatile session. It seems that the EUR/HUF 250-252 range no longer exists and the pair is now ready test the 254.0 resistance.
(CSOB - Investment research)