Goldman Sachs is recommending traders take a short position on the euro versus the Hungarian forint as Hungary’s incoming leadership, following Sunday’s ballot, weighs the country’s prospects of joining the single currency area, strategist Teresa Alves said.
The bank has adjusted its EUR/HUF forecasts downward, setting revised central estimates at 355 in three months, 350 in six months and 345 in 12 months. These replace prior forecasts of 390, 380 and 375 over the same respective horizons.
Alongside the forecast revisions, Goldman launched a new trade idea to go short EUR/HUF. The recommendation specifies a target level of 350 and a stop at 372. Market data showed the forint trading around 361 on Friday.
Alves framed the call in valuation terms. She said a move of roughly 10% from the forint’s close on Thursday would be consistent with the forint reaching its historical peak of overvaluation and would bring its valuation into line with the average of its regional peers, specifically the Polish zloty and the Czech koruna.
The recommendation ties immediate trade parameters - target and stop - to the bank’s revised path for EUR/HUF and current market levels. Traders and currency desks monitoring pair dynamics now have clearly defined execution and risk limits from the bank’s new guidance.
Context and market implications
Goldman’s guidance underscores a view that the forint could strengthen if political developments reduce perceived risk around Hungary’s currency status relative to regional comparators. The adjusted forecasts imply a materially lower euro value versus the forint across all three forecast horizons provided by the bank.
Market quote cited
Strategist Teresa Alves said the roughly 10% move from the forint’s close on Thursday would align the currency with its historical overvaluation peak and the average valuation of the Polish zloty and the Czech koruna.
Current market level referenced
The forint was trading near 361 on Friday, according to the market level cited in the bank’s note.