Hungary forint shows nice gains to EUR in massive turnover

The firming of the forint was also helped by the fact that there was a turnaround in positions that speculated on the zloty's strengthening and a weakening of the HUF, the dealer added.

Kovács said giant options deals were also suspected behind the forint's firming. His opinion is underpinned by the fact that in morning trade it took the forint a mere 20 seconds to firm to 268 from 269 (a single contract could produce shifts this large).

The closure of earlier EUR buy/HUF sell positions could also help the forint (generates forint purchases), but market sources said that due to the abrupt strengthening of the Hungarian currency a lot of deals could have “stuck" on higher stop-loss levels (the cross has virtually gone across them undetected).

Kovács said the external environment currently appeared stable, which makes him believe the forint's strengthening will not just pass by.

From a technical point of view, the next strong resistance could be at 266.10 and Kovács said the HUF could even reach 264 vs. the EUR in the coming days.

As for the room north, the dealer put the next strong barrier to 268.50/269.00 and then to 272 and 275/276. He added the region between 278 and 280 would not be tested for some time.

Both Kovács and another dealer, who requested anonymity, agreed that if Moody's decided to downgrade Hungary - potentially by two notches according to some analysts - a forint weakening would still be only transitional. They also agreed that there was no fundamental reason behind the forint's current strengthening although the higher-than-expected September CPI data (5.9% yr/yr vs. 3.5% in Aug ) induced a larger-than-usual buy pressure on the secondary market.