HUF: EURHUF Bear Cycle Remains in Play as Focus Shifts to NBH
EURHUF had fallen 0.2% earlier in the session, extending the decline from the week’s highs to around 0.5%, before paring the bulk of its fall and returning close to flat. Geopolitics have dominated this week, and while the Israel-Iran conflict does not appear to have any foreseeable resolution in the near-term, the situation has not significantly deteriorated either. Overall, that leaves the Hungarian forint little changed compared the week’s opening levels, and for EURHUF, that means a bear cycle remains in play.
- Spot remains above the psychological 400.00 handle, with 399.03, the Apr 2 low, flagged as support below this. Meanwhile, key short-term resistance has been defined at 404.65, the May 27 high.
- Next week focus will be on the NBH’s rate decision on Tuesday. Given policymakers have stuck to their “cautious and patient” rhetoric in latest comments, no change to the 6.50% base rate is anticipated. Among sell-side, views remain mixed over whether inflation will develop in a way which would be consistent with rate cuts from 3Q. The NBH continue to expect headline CPI to hover around 4.0% Y/Y in the coming months.
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LOOK AHEAD: Wednesday Data Calendar: Fed Speakers, Bills & Bond Sales
- US Data/Speaker Calendar (prior, estimate)
- 21-May 0700 MBA Mortgage Applications (1.1%, --)
- 21-May 1130 US Tsy $60B 17W bill auction
- 21-May 1215 Richmond Fed Barkin, Fed Gov Bowman Fed listens event
- 21-May 1300 US Tsy $16B 20Y Bond sale (912810UL0)
US 10YR FUTURE TECHS: (M5) Bear Threat Still Present
- RES 4: 112-20+ High May 1 and a bull trigger
- RES 3: 112-01+ High May 2
- RES 2: 111-22 High May 7 and a key near-term resistance
- RES 1: 110-24+ 50-day EMA
- PRICE: 109-27+ @ 11:12 BST May 21
- SUP 1: 109-18+ Low May 15
- SUP 2: 109-08 Low Apr 11 and key support
- SUP 3: 108-26+ 76.4% retracement of the Jan 13 - Apr 7 bull cycle
- SUP 4: 108-21 Low Feb 19
Treasury futures are trading lower today and maintain a bearish tone. The recent breach of 110-01+, 76.4% of the Apr 11 - May 1 bull leg, strengthens a bearish theme and exposes key support at 109-08, Apr 24 low and a bear trigger. Key near-term resistance is at 111-22, the May 7 high. A move above this level is required to signal a potential reversal. First resistance is at 110-24+, the 50-day EMA.
CROSS ASSET: Risk Off prevails, US 30yr Yield remains above 5%
- As noted on the Bund Open, US Yields level remain a deep concern for investors, higher US rates impact the cost of service its debt, the Tax plan is expected to raise Debt and its Deficit.
- Pointed to the US Emini on the European Open and potential for some fade back down to 5867.25 and the 5789.06 area.
- Higher Yield combined with the Risk Off was the cause for the Tariffs delay back in April.
