HUNGARY: EURHUF Reverses Earlier Advance Following Stronger-Than-Expected CPI
EURHUF had risen close to the 407.00 mark at the start of the European session before paring its advance on the stronger-than-expected CPI data. Earlier HUF weakness lacked a clear driver, but the latest inflation data is unlikely to convince the central bank to follow policymakers in the Czech Republic and Poland and cut interest rates in the near future. Governor Mihaly Varga said he backed holding the base rate at the current 6.50% for a “sustained period” given rising risks from global trade uncertainty, with this cautious approach still justified as headline inflation remains above the tolerance band.
- Money markets have recorded a slight hawkish correction in response to this morning’s data – as evidenced by HUF FRAs – and continue to suggest that the scope for near-term easing appears limited. Some sell-side analysts had noted following the April NBH meeting that a continued decline in inflation could be enough to change the central bank’s hawkish tone from H2 onward.
- For EURHUF, the pullback between Apr 14 - May 5 appears corrective from a technical standpoint, at least for now. However, the cross has recently pierced support at the 50-day EMA which undermines a bullish theme, and a clear break of this average – intersecting today at 404.72 – would signal scope for a deeper retracement, potentially exposing 399.03, the Apr 2 low. On the upside, first resistance to watch is 407.16, a trendline drawn from the Apr 15 high.
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AUDUSD TECHS: Oversold But Remains Bearish
- RES 4: 0.6409 High Dec 9 and a key resistance
- RES 3: 0.6389 High Apr 3
- RES 2: 0.6270 50-day EMA
- RES 1: 0.6127/0.6187 High Apr 7 / Low Mar 4
- PRICE: 0.5996 @ 08:05 BST Apr 9
- SUP 1: 0.5915 Intraday low
- SUP 2: 0.5900 Round number support
- SUP 3: 0.5830 2.000 proj of the Sep 30 - Nov 6 - 7 price swing
- SUP 4: 0.5729 2.236 proj of the Sep 30 - Nov 6 - 7 price swing
AUDUSD maintains a bearish tone following the latest steep sell-off. The move down confirms a resumption of the downtrend that started late September last year. A key support at 0.6088, the Feb 3 low, has been broken. This paves the way for an extension towards the 0.5900 handle next. On the upside, resistance to watch is at 0.6187, the Mar 4 low. The trend is oversold, a recovery would allow this set-up to unwind.
RIKSBANK: VIEW: Handelsbanken Now Expect Cuts In Jun, Aug and Sep To 1.50%
Handelsbanken now expect the Riksbank to cut rates to 1.50% this year, with cuts in June, August and September, as “the dramatic US tariff increases are leading to a US recession and delaying the recovery of the Swedish economy”.
- Their previous base case saw rates on hold a 2.25% through 2025.
- Handelsbanken note that “with higher tariffs than expected and turbulence in the financial markets, everything now indicates that [Swedish] growth this year will be significantly weaker than we expected in our previous forecast.”
- “Our assessment is that the inflation target is not threatened by the higher tariffs, and that the Riksbank will therefore act to mitigate the negative effects on the economy”.
US 10YR FUTURE TECHS: (M5) Monitoring Trendline Support
- RES 4: 114-10 High Apr 7 and the bull trigger
- RES 3: 113-09+ 76.4% retracement of the Apr 7 - 9 sell-off
- RES 2: 112-21+ 61.8% retracement of the Apr 7 - 9 sell-off
- RES 1: 112-08 High Apr 7
- PRICE: 110-25 @ 07:49 BST Apr 9
- SUP 1: 110-01 Intraday low
- SUP 2: 109-29 Trendline support drawn from the Jan 13 low
- SUP 3: 109-13+ Low Feb 24
- SUP 4: 108-26+ 76.4% of the Jan 13 - Apr 7 bull cycle
A sharp sell-off in Treasury futures this week has resulted in a breach of both the 20- and 50-day EMAs. Attention is on trendline support at 109-29, drawn from the Jan 13 low. A clear break of this support would strengthen a bearish threat. Note that the steep sell-off could still be a corrective pullback that has allowed an oversold trend condition to unwind. Initial resistance to watch is 112-08, yesterday’s high. A break would highlight a possible early reversal.
