Geopolitical risks and elevated CPI projections triggered a sell-off in Central European FX, with the Hungarian forint hit hardest.
The Hungarian forint faced sharp selling pressure as US-Iran tensions drove a 1.2% jump in EUR/HUF, the largest move since early March. The sell-off reflected vulnerability from heavy long positioning post-April elections and expectations of rate cuts by Hungary’s central bank.
Poland’s National Bank maintained a neutral stance, citing lower oil prices, weaker growth in key trading partners, and declining inflation. Meanwhile, Czech markets priced in an additional half-rate hike, bringing expectations to one and a half hikes, while Polish rate cut bets faded.
Analysts view EUR/HUF near 360 as attractive for new forint longs if geopolitical risks ease, though uncertainty remains elevated due to Middle East developments and above-expectation CPI projections.