I'm traveling to Prague and Budapest. Can I use euros there or do I have to use the local currency (czech crown, hungarian forints) ?
Most places much prefer to use their currency because you know what it is worth. If you are using Euro or US dollars your exchange rate will always be bad. The more touristy places probably will accept Euro but don't count on any fairness.
You will use local currency. Take a VISA or Mastercard ATM card with you with Cirrus, Star or Plus global affiliations. You will get the best exhcange rate using the ATM machines.
I agree that you will get the best rate using the ATM machine to buy local currency in both countries. I have use ATMs in over countries and never had a problem.
The machines are easy to find in hotels, supermarkets, service stations, retail stores, post offices in Switzerland, air terminals, RR stations and outside banks.
You can use EUR but you'de be insane to bother. The shops and resturants that will take EUR do so at outrageous exchange rates.
The only exception to this are some hotels. Some hotels prefer to advertise their room rates in EUR and will accept payment in EUR at the advertised rate. This can often prove just a fraction cheaper than paying in CZK.
Just got back from visiting both cities on RS Eastern Europe tour - we found NO places in either city advertising euro prices - nor did we try to use them - we use debit cards at ATM machines for local currencies