EUR/SEK to wait until mid-2Q before seeing a decisive retrace to 10.40 – ING

FXStreet Insights Team FXStreet

EUR/SEK has hit the 10.60 level. Economists at ING expect the Swedish krona to strengthen but that may have to wait until at least the mid of the second quarter.

Undervalued, but no recovery soon

“We may have to wait until mid-2Q before seeing a decisive retrace to the 10.40 mark despite the EUR/SEK pair being around 2% overvalued in the short-term (according to our fair value model). That’s because the combination of a dovish Riksbank, negative exposure to US tech stock woes and geopolitical risk in Ukraine should all curb the krona's recovery.”

“If EUR/SEK remains stuck around 10.60 with risks of a move to 10.70-10.80, USD/SEK could easily see a rise to the 9.48 January high, especially if tensions in Ukraine continue to build.”

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