Key insights
- Goldman Sachs lowered its EUR/HUF forecasts and recommends shorting the pair, anticipating forint appreciation due to improved fiscal policy and inflation management under the new Hungarian government. The expectation of EU fund disbursement and potential Euro adoption are key drivers. While this impacts European currency markets, the direct influence on US equities is limited.
Investing.com - Goldman Sachs revised its EUR/HUF forecasts lower and initiated a short recommendation on the currency pair, citing expectations for sustained forint appreciation driven by improved fiscal policy and inflation outcomes under Hungary’s incoming government.
The bank set new EUR/HUF forecasts of 355, 350, and 345 for three-, six-, and 12-month horizons, down from previous forecasts of 390, 380, and 375. Goldman Sachs initiated a trade recommendation to go short EUR/HUF with a target of 350 and a stop at 372.
The incoming Tisza government holds a two-thirds super-majority in the Hungarian Parliament, enabling swift passage of legislation expected to unblock EU funds and advance Euro adoption. Goldman Sachs said EU fund disbursement could strengthen the forint based on its GSFEER model, while Euro accession prospects could drive further appreciation.
Goldman Sachs cited Slovakia’s currency convergence as a potential parallel, noting the Slovak koruna appreciated 20% against the euro during its convergence process due to productivity gains and inflows from EU and Euro area accession. The bank said sustained inflation convergence toward 2% would stabilize EUR/HUF, while improved productivity growth could lower the currency pair’s fair value.
The bank’s analysis suggests a roughly 10% move from Thursday’s close would align the forint with its historical overvaluation peak and match the average valuation of regional peers including the Polish zloty and Czech koruna.
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