Kumowizard
Long

EURHUF follow up: bullish break after rate cut - HUF will suffer

FX:EURHUF   None
62 0 0
Referring to my prev. chart:

NBH cut base rate by 15 bps             yesterday. My expectation was for 10 bps             only + some less dovish comments or some hints on the future monetary policy to be rather cautious.

However NBH surprised the mkt with not just cutting the rate, but keeping its extremely dovish stance. I clearly believe that NBH is either doesn't understand what is the risk of cutting rates too low, or they do understand it, but policy really wants to see EURHUF             a lot higher. So the breakout took place to the upper side.

Immagine if EURHUF             trades at these levels in a relatively bullish global environment, what will happen to it, when things turn back corrective or medium term bearish?

HUF             is more and more vulnarable, no rate differential at all. Funny thing is that ag. PLN it is positive carry to hold HUF             shorts! I won't be surpised if in a next meltdown hungarian rates and ccy will become one of the major target for a HF attack. Next tgt             on daily chart is ard             320. One thing to keep in mind: NBH is well loaded with FX reserves now to protect it at some point.

For those who missed the long entry: watch USDHUF             long instead to play . In case EURUSD             turns around, USDHUF             will have a huge potential to blow up. Maybe ard             240 lvls.
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