CEE FX: Negative sentiment weighs on currencies – ING

May 20, 2026 fxstreet.com

⦿ Executive Snapshot

What: Negative sentiment is impacting Central and Eastern European (CEE) currencies amid a rally in the US Dollar.
Who: ING strategist Frantisek Taborsky and the Hungarian National Bank (NBH).
Why it matters: The current risk-off sentiment could lead to significant downside risks for CEE currencies, affecting economic stability in the region.

The EUR/PLN and EUR/CZK are approaching the upper ends of their recent trading ranges, with EUR/PLN at 4.230-260 and EUR/CZK at 24.250-400.
A rally in the US Dollar is contributing to building downside risks for CEE currencies, with negative economic impacts expected in the coming months.
The Hungarian Forint (HUF) is experiencing profit-taking, influenced by a dovish stance from the NBH and the potential for EUR/HUF to break above 365.

CEE currencies have been resilient since the onset of the conflict, but current global risk-off sentiment is shifting the outlook negatively.
The local economic story in Hungary has been affected post-elections, leading to investor exhaustion and profit-taking within HUF assets.

Immediate consequences may include increased volatility and potential weakening of CEE currencies if profit-taking accelerates amid a stronger US Dollar.
Long-term implications could see a shift in market sentiment towards rate cut expectations from the NBH if EUR/HUF surpasses critical levels, complicating FX carry trades.

Regulatory and execution risks arise from the potential for a dovish shift in monetary policy by the NBH, which could undermine currency stability.
Increased competition from stronger currencies like the US Dollar may put further pressure on CEE currencies, limiting their appeal to investors.

Monitor the EUR/HUF exchange rate closely, particularly if it approaches or exceeds 365, which may trigger unwinding of rate cut bets.
Watch for upcoming economic data releases that may reflect the delayed impacts of the current risk-off sentiment on the CEE economies.

What is currently affecting CEE currencies?

Negative sentiment and a rally in the US Dollar are impacting Central and Eastern European currencies.

Why is the Hungarian Forint experiencing profit-taking?

Profit-taking in the Hungarian Forint is influenced by a dovish stance from the Hungarian National Bank and market exhaustion post-elections.

How might the current risk-off sentiment impact CEE economies?

The risk-off sentiment could lead to significant downside risks for CEE currencies, potentially affecting economic stability in the region.

When should investors monitor the EUR/HUF exchange rate?

Investors should closely monitor the EUR/HUF exchange rate, especially if it approaches or exceeds 365, as it may trigger unwinding of rate cut bets.