EUR/HUF Falls As HUF Rebounds

The USD generally retreated during the European morning. Among the G10 currencies, the JPY was the only currency to fall significantly against the USD during the session. The EM currencies largely gained despite a rebound in oil prices, with only IDR and INR falling.

Hungarian forint (HUF) was the main gainer during the European morning against both the USD and the EUR. The gains were justified by news that the country’s manufacturing PMI rebounded to 51.7 from 49.0 in July, although that news was released about 40 minutes after the bulk of the move in the currency had taken place. It may simply be that with confidence coming back into the EM currencies, the market decided that HUF was oversold, (it was down considerably on Friday vs both USD and EUR) and bought it back.

Technical view:
EUR/HUF moved lower during the European morning, breaking below the lower boundary of the triangle, identified on the 1-hour chart, and the 299.90 (R1) level (morning’s support). Currently the pair is heading towards the 299.26 (S1) support and if sellers keep the pressure on, I expect them to break below that support line and target the 298.43 (S2) level next. The ADX and MACD readings make that scenario seem likely. The ADX has just crossed above 20 with –DI lying above +DI, while the MACD has crossed below zero, indicating bearish momentum for the pair. Furthermore, EUR/HUF is trading below both the 20- and 200-period moving average, completing the pieces of the bearish picture.

Support: Support is found at the 299.26 (S1) level, followed by 298.43 (S2) and 297.44 (S3) respectively.

Resistance: Resistance levels are at 299.90 (R1), followed by 301.07 (R2) and 301.61 (R3).

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