CEE MARKETS-Forint holding near six-week high before Hungary rate meeting this week

WARSAW/BUDAPEST, Jan 26 (Reuters) - The forint held tight on Monday near six-week highs hit last week with Hungary's central bank meeting this week and likely to continue a long stretch of policy stability, and other central European currencies sought direction.

The forint EURHUF= was 0.1% weaker at 382.40 to the euro at 0923 GMT, within sight of its recent high of 381.65.

"The forint continues to be strong. There has not been any substantial correction following last Thursday's gains and the forint has started to test the resistance level at 381.90 to the euro. If this is broken, the next level could be at 380," brokerage Equilor said in a note.

Hungary's central bank looks all but certain to leave its base rate steady at 6.5% on Tuesday, the European Union's joint-highest level HUINT=ECI, a Reuters poll showed, as strong services pricing at the end of last year tempers the case for easing.

RETURN TO RATE CUTS?

With no change in the base rate since late-2024, Governor Varga last month opened the door to a possible rate cut after the bank's meeting in December.

"The bank's communication tomorrow could be of crucial importance," Equilor added.

Analysts see room for 75 basis points worth of rate easing by the end of 2026.

Another key factor of uncertainty for 2026 is the outcome of a national election on April 12, where right-wing Prime Minister Viktor Orban will fight to extend his 16-year grip on power against a surging centre-right challenger.

Elsewhere, the Czech crown EURCZK= edged lower to trade at 24.265 to the euro and the Polish zloty EURPLN= remained unchanged at 4.2095 per euro.

Polish retail sales rose 5.3% year-on-year in December, slightly less than analysts had expected.

"On Wednesday, we will see GDP numbers in Poland and on Friday in the Czech Republic and Hungary for the fourth quarter of 2025 and the full year," ING said in a note to clients.

"And we should see confirmation of the two-speed region, with Poland and the Czech Republic on the strong side and Hungary on the weak side."

Stock markets in the region rose, with Prague's main index .PX leading gains with a 1% rise.