EUR/HUF (light blue):
1 April 2018: President Orban is re-elected. Political uncertainty launches an upward trend in EUR/HUF. The pair leaves the 305/315 sideways trading band.
2 The currencies of both the Czech Republic and Hungary often show inverse correlation with the US dollar. The strong performance of the USD since April/May leads to a weakening of the krona and forint.
3 Markets doubts economic sustainability of Turkey and massively sell the Turkish lira. Hungarian forint (and Czech koruna) suffers collateral damage.
4 Despite strong economic data, Hungarian forint slips because of pressure on emerging countries (Turkey, Russia, etc.).
5 The European Union activates the sanctions procedure (the infamous Article 7) against Hungary, which may ultimately end in the deprivation of voting rights. The effective implementation is highly uncertain because every EU member has a veto. The forint hardly reacts.
6 During a speech, the vice governor of Hungary’s central bank Marton Nagy flags the start of monetary tightening by the central bank. The central bank kept that option on the table when it held its policy meeting just a few days later, further supporting the recent foriny rally.