The cross is seen extending its range trade at current elevated levels in the near term, according to Chief Analyst Allan von Mehren.
“The very muted reaction in EUR/SEK and Swedish short rates following the Riksbank’s proposal yesterday to change from CPI to CPIF as a target variable and also the introduction of a tolerance interval +/- 1pp around 2%, suggests that the Riksbank is credible when it says the changes have no impact on current monetary policy”.
“In terms of price actions, we note that while our short-term models suggest that EUR/SEK is some 1.9% overbought, EUR/SEK is likely to remain supported near term driven by strong momentum in EUR. Moreover, we still hold the view that EUR/SEK is likely to remain elevated as long as the Riksbank and the ECB stay soft. We forecast 3M at 9.50, 6M and 12M at 9.30and 12M to 9.50 (previously 9.40), 9.50 (9.30) and 9.30 (9.20)”.