ING economists Peter Virovacz and Frantisek Taborsky said Hungary’s new Tisza-led supermajority has reduced near-term policy uncertainty. They said it has also lifted expectations of faster institutional repair, improved EU relations and stronger fiscal credibility.
They said EU-fund disputes may not be resolved quickly, despite broad expectations. They expect delays before any EU money is released.
Budget Reset And Fiscal Tradeoffs
They said the budget is under pressure to be reworked because the macroeconomic assumptions behind it have changed. They added that removing the inherited budget and economic policy framework could worsen fiscal metrics in the short term.
They said the new government could set a target date for adopting the euro and outline a route to reach it. They said details of that route could be adjusted later.
The article said it was created with the help of an Artificial Intelligence tool and reviewed by an editor.
The new supermajority provides a clearer political outlook, but this stability comes with a mix of signals. We see short-term fiscal pain clashing with the long-term promise of institutional repair and credibility. This suggests that implied volatility on forint options, which was already elevated during the 2025 election cycle, will likely remain high in the coming weeks.
Trade Setup For Near Term Volatility
We expect the process of dismantling the inherited budget to reveal some negative figures. Hungary’s budget deficit already hit HUF 2,321 billion in the first quarter of 2026, and any further short-term deterioration to restructure policy will likely weigh on the forint. This environment favors buying near-term call options on the EUR/HUF pair, targeting a move above the 400 level.
The optimism surrounding the release of EU funds should be treated with caution. We saw back in the 2023-2025 period how drawn-out these negotiations can be, and any delay would remove a key support for the currency. Continued uncertainty here supports holding bearish positions on the forint for the next one to two months.
However, the possibility of setting a target date for euro adoption is a major bullish catalyst that cannot be ignored. A credible announcement would trigger a significant rally in the forint as convergence trades are put on. Traders should consider buying longer-dated, out-of-the-money call options on the HUF to position for this potential upside without taking on excessive near-term risk.
This creates an environment for calendar spread strategies on the EUR/HUF. One could sell near-term calls to capitalize on current premiums while simultaneously buying calls with later expiration dates. This would position for short-term weakness or sideways movement followed by a potential forint strengthening later in the year.
