What drives the EURHUF cross?
Hungary was one of the European countries with the highest interest rates in the 90s. The benchmark rate used to be above 20%!
Since then, the central bank of Hungary has been slowly cutting rates and brought the main rate down to 0.9% in 2016. Despite the economic recovery during 2016 – 2019, the central bank failed to hike rates. Thus, the key refinancing rate was near zero when the coronavirus hit in 2020, and there was simply no room to cut rates anymore.
Performance
As the Hungarian monetary policy remained unchanged for many years and it was very similar to the monetary policy of the Eurozone, the
EURHUF cross has been moving sideways, with a slight uptrend slope.
As you can see from the daily chart of the EURHUF cross, it has been slowly rising for many years, but in percent, it was like 10% in 3-4 years, so nothing extraordinary.
Source: Purple Trading Metatrader 4
However, after the coronavirus panic, the Visegrad four currencies declined notably as these currencies are deemed as risky currencies. During volatility and times of fear, the CZK, HUF, and PLN usually drop as these economies will most likely underperform the core of the Eurozone.
The EURHUF cross rose from 335 to 370 in a matter of days, which was a 10% depreciation of the Hungarian Forint. As the panic eases, the Forint erased some of the losses.
As we previously said, the long-term volatility is minimal; thus, this cross is not very good for long-term investors, but short-term and swing volatility could be optimal for traders.
EURHUF cross – quotes and trading
If you are interested in trading the EURHUF cross, open our Metatrader 4 platform and find the EURHUF cross in the symbols. When you click on the new order, the following window will appear.
Source: Purple Trading Metatrader 4
As you can see, the spread between the Ask and the Bid price is circa eight pips, but the spread can fluctuate slightly, mainly during volatile times of the day.
Lot value calculation
The minimum amount to trade is 0.01 lot, while one lot represents 100,000 EUR. So, if you are trading 0.01 lot (or a micro lot), you will be trading 1,000 EUR. The 0.1 lot is also called a mini lot and represents 10,000 EUR. If you want to buy or sell half a lot, you will be trading 50,000 EUR. Two lots are 200,000 EUR and so on.
Besides, you can open a market execution trade, which means that it will be done at the current market price, or you may use pending orders – limit and stop orders. Finally, it is possible to use the stop-loss and take-profit orders when opening the trade, or you can add them later when the deal is live.