EUR/SEK revised lower to 10.20 in 1-month – Danske Bank

Pablo Piovano FXStreet

Setefan Mellin, Senior Analyst at Danske Bank, noted the cross is seen around 10.20 in a month’s view.

Key Quotes

“Our bearish SEK view has two pillars: first, the inflation outlook makes it hard for the Riksbank to raise rates this year; second, a sharp slowdown in growth due to the housing market”.

“That said, we argued that EUR/SEK looked overbought and was prone for a correction. Since then, we have seen the sharpest krona recovery since 2015”.

“There is a silly circular reference from a weak SEK to higher inflation to higher rates and then back to a stronger SEK that sort of caps the upside in EUR/SEK. On the other hand, this circular reference is symmetric, where too much SEK appreciation will not be welcomed by the Riksbank given subdued underlying inflation while a slowdown in growth remains a headwind for the SEK”.

“We set 1M to 10.20 (10.40), 3M to 10.30 (10.50), 6M to 10.50 (unchanged) and 12M to 10.20 (unchanged)”.

Author

Pablo Piovano

FXStreet

Born and bred in Argentina, Pablo has been carrying on with his passion for FX markets and trading since his first college years.

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