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According to Ned Rumpeltin, European head of FX strategy at TD Securities, SEK weakness now looks overdone, and no longer appears to be supported by underlying fundamental or technical factors.

Key Quotes

“The Swedish economy has softened but the move looks overdone – particularly as other risky assets have recovered sharply YTD.”

“With a lot of the bad news now in the price, we think the SEK looks vulnerable to a correction. This week’s Riksbank meeting should pass quietly, but our base case for a broadly unchanged policy stance is unlikely to provide further fuel to SEK bears.”

“Against this backdrop, we think EURSEK looks ripe for a reversal lower. The October 11 high (10.5370) should provide a notable degree of resistance heading into this week’s policy meeting.”