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The krona underperformed on Thanksgiving day after EUR/SEK squeezed sharply off the 10.12 area. Economists at TD Securities believe the pair may have found a floor at the mentioned 10.12 area, however, the upside is limited with the 10.22 level capping.

Key quotes

“We note the 10.12 region has contained downside risks since early 2018, suggesting potential for acceleration toward 10.03 on a sustained break lower. That may have to wait, however, as a near-term floor may be in.” 

“We do not favour chasing the topside as an eventual QE extension was already well-flagged and policymakers remain reluctant to venture back into negative rates.” 

“We think 10.22 should cap further gains as SEK remains highly sensitive to broader sentiment.”

 

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