Yesterday, weaker economic data from the U.S., combined with an increasingly active new administration, led to a downturn for the dollar. Meanwhile, Hungary kept its interest rates unchanged, and the cryptocurrency market saw a sharp sell-off.
What’s Happening with the Dollar?
The U.S. is currently making waves in global geopolitics, which is already having a significant impact on currency markets. In addition, macroeconomic data is playing a crucial role. Yesterday, the Conference Board Consumer Confidence Index was released, showing a reading of 98.3 points, well below market expectations of 102.5 points and marking the weakest level since April 2024.
This decline in consumer confidence alarmed markets, as it signals potential risks to sustained high levels of consumption. As a result, the U.S. dollar weakened significantly. The EUR/USD pair once again moved above 1.05, marking one of the weakest levels for the dollar since the beginning of Donald Trump’s presidency. The dollar’s decline is even more pronounced against the Polish złoty, which has been strengthening in recent weeks.
Hungary Keeps Interest Rates Unchanged
Yesterday, Hungary’s central bank announced its latest interest rate decision, keeping rates steady at 6.5%—a level unchanged since September. While this may seem high at first glance, inflation in Hungary has been accelerating.
Back in September, annual inflation stood at 3%, but since then, prices have been rising at a faster pace each month. This trend led policymakers to halt the ongoing cycle of interest rate cuts. In January 2025, inflation surged to 5.5%, significantly narrowing the gap between the central bank’s key interest rate and inflation.
Back in September, the main rate exceeded inflation by 3.5%—now that buffer has shrunk to just 1%. This shift explains why markets were not expecting a rate cut, and as a result, the Hungarian forint showed little reaction to the decision.
Crypto Market Plunges
Since the start of the week, the cryptocurrency market has experienced a sharp decline. Bitcoin alone has dropped by more than 7%, falling below $87,000 for the first time since November 2024. Smaller cryptocurrencies have suffered even greater losses.
Analysts point to two key factors behind this sell-off:
- Fears of Economic Slowdown – Markets are reacting to Donald Trump’s aggressive stance on sanctions, which many fear will dampen global economic activity.
- A Major Crypto Exchange Hack – The market was rattled by the largest successful attack on crypto wallets in history (in terms of value at the time of the breach). While the situation has been stabilized for now, analysts are raising concerns about the long-term financial stability of the affected exchange.
Maciej Przygórzewski – Chief Analyst at InternetowyKantor.pl
Disclaimer:
The information contained in this publication is for informational purposes only. It does not constitute financial or any other type of advice, is general in nature, and is not directed at any specific recipient. Independent advice should be sought before using this information for any purpose.
Source: Manager Plus
