By Anita Komuves

BUDAPEST, Oct 10 (Reuters) -Hungary's forint weakened past the psychological 400-per-euro level again on Thursday, underperforming regional peers as it was pressured by dollar gains while a central bank deputy governor dampened rate cut expectations for this year.

The currency EURHUF=, central Europe's worst performer so far this year, weakened 0.5% on the day to trade at 400.55 per euro as it was pressured by a stronger dollar and a rise in U.S. Treasury yields, two traders in Budapest said.

"Both the forint and the zloty gave up their gains from the previous two session," one trader said.

The forint was hovering near an 18-month low hit last week, when it was pressured by tensions in the Middle East and a shift in the U.S. interest rate outlook.

Deputy Central Bank Governor Barnabas Virag flagged a likely pause in the National Bank of Hungary's (NBH) rate cuts on Thursday in an interview with Reuters.

"The developments which have unfolded since the end of September justify that in this environment the scope for decisions has definitely shifted towards pausing the rate cut cycle," Virag said.

A second trader said that most market participants now expect the NBH to keep rates unchanged at the Oct. 22 meeting.

"If they do not cut, that could calm the market," he said. "What worries me is whether the government will put pressure on the bank to cut further," he said.

Faced with a weak recovery from last year's recession, Prime Minister Viktor Orban's government has called on the NBH to cut rates more sharply, though the veteran leader has toned down his pressure on the bank ahead of an NBH leadership change in March.

Data published on Thursday showed Hungarian inflation falling to the central bank's 3% target for the first time since January 2021. In the Czech Republic, consumer prices jumped 2.6% year-on-year, more than expected.

The crown EURCZK= edged up 0.09% on the day to trade at 25.322 per euro, but remained close to near two-month lows hit last week.

Falling financing costs in Hungary and the Czech Republic have been a drag on the countries' currencies while stable rates in Poland support the zloty, even though a strengthening dollar weighs on all of the region's currencies.

The zloty EURPLN= dipped 0.26% on the day to trade at 4.305 per euro.

Investors were also eyeing inflation data from the U.S. scheduled to be released later in the day.

Writing by Anita Komuves
Editing by Mark Potter

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