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EU leaders are scheduled to meet on December 10-11 and economists at Raobank remain of the view that tensions between Hungary/Poland and the rest of the EU may escalate in the coming weeks. EUR/PLN is edging above the downside trendline which capped gains since mid-November while EUR/HUF consolidates its recent gains, which should be followed by another leg higher.

Key quotes

“Hungarian PM Orban and his Polish counterpart Morawiecki aligned and solidified objections to the rule of mechanism during their meeting in Budapest on Thursday. The joint declaration signed by both PMs implies that they are not willing to make substantial concessions to overcome the impasse caused by their veto and unlock hundreds of billions of euros which are urgently required by EU countries to start rebuilding their economies from a recession caused by the coronavirus pandemic.”

“We do see a risk of a brief spike higher in EUR/PLN and EUR/HUF amid growing market realisation that it may take much longer to solve this dispute and the redistribution of EU funds could be substantially delayed which would be negative for European assets in the short-term.” 

“The price action in EUR/PLN has started to look more bullish as the downside trendline – which capped gains since the middle of November – has been cleared. A close above the 4.50 pivot would be another indication that the short-term bias has shifted to the upside.”

“A period of consolidation in EUR/HUF should be followed by another leg higher towards the October high at 369.25.”


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