Hungarian Forint appreciates broadly against US Dollar amid Yellen remarks

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Hungarian Forint (HUF) appreciated against the US Dollar (USD) yesterday, for the third day in a row, dragging the USD/HUF to 223.00 amid dovish tone from the Fed chair Janet Yellen; the pair is expected to test the channel support in the near future.

Technical Analysis

USD/HUF is being traded near 223.03 at 7:50 GMT in Asia. The pair is likely to find hurdle around 225.28, 38.2% fib level, ahead of the channel resistance which is currently sitting in near 227.10. A break and daily close above the downward slope channel will be seen as very bullish for the pair, exposing the 232.00 handle.

On the downside, the pair might find support around 221.00, 50% fib level, before the channel support near 218.00. A daily close below the lower trendline will be required for more dips below the 210.00 handle.

Hungary Retails Sales

 On Thursday, April 03, Hungarian Central Statistical Office (HCSO) is scheduled to release the retail sales report for the month of February. According to average forecast of different economists, the sales declined by 3.37% in February as compared to 6.2% in the same month of the year before, better than expected actual outcome will be seen as bearish for USD/HUF and vice versa.

Industrial Production

On Tuesday, April 08, HCSO is due to release the industrial production data. The production increased by 7.69% in February as compared to 6.1% in the month before, the average forecast of various analysts says. Higher industrial production is seen as positive for the economy and vice versa.

US Manufacturing Activity

Today the Institute of Supply Management (ISM) is due to release the manufacturing report of the US. Manufacturers in the US received more orders during March, increasing the Purchasing Managers Index (PMI) to 54.0 points, as compared to 53.2 points in the month before.  Better than expected actual figure will be seen as bullish for USD/HUF and vice versa.

Yellen Remarks

Fed chairperson Janet Yellen took another U-Turn yesterday saying the US economy still requires stimulus. She said the current situation of the economy does not allow abrupt removal of the stimulus worth $55 billion a month. The yesterday’s remarks were completely opposite to what she said during the monetary policy press conference on Wednesday, March 19. Yellen had expressed satisfaction over the pace of the growth saying the central bank might announce the first hike in the overnight lending rate as soon as the next half of the ongoing year.

Conclusion

Keeping in view the fragile growth in Hungary, the ongoing correction in USD/HUF appears temporary and the pair might surged broadly in the next couple of months to test the major milestone around 250.00. 

To contact the writer of this story: Usman Ahmed at usman@forexminute.com