Aila Mihr, senior analyst at Danske Bank, points out that the SEK has suffered lately at the hands of a soft Riksbank and seeing as the accommodative stance is here to stay for a while, there is no turnaround for the SEK in sight.
“Our short-term models do, however, indicate that EUR/SEK is somewhat overbought, and thus there is scope for some SEK-support, albeit limited, in the short run.”
“Further, the market has already priced out almost all probability of a rate hike this year, which might alleviate some of the pressure on the SEK for now. However, we believe there is a clear risk that Swedish growth and inflation will undershoot the Riksbank’s forecasts further out on the horizon, and that monetary policy will have to remain accommodative for the foreseeable future. Therefore, on balance, we raise our 1M forecast to 10.70, 3M to 10.80, 6M to 10.90 and 12M to 11.00.”