EUR/SEK: Krona Faces Challenges Amid Cyclical Trends – Danske Bank

EUR/SEK and USD/SEK have seen strong rebounds so far this year, according to economists at Danske Bank who are examining the outlook for the Krona.

They predict that the SEK will weaken due to several factors, including the current cyclical backdrop. The European growth outlook is subpar, resembling a recession in some cases, which presents a challenge for the Swedish economy.

Despite expectations for a recovery, domestic demand and the housing market in Sweden remain sluggish.

Furthermore, the Riksbank’s monetary policy is not expected to diverge significantly from that of the European Central Bank (ECB), nor is the Federal Reserve expected to diverge significantly from other central banks. This leaves the SEK vulnerable from a rate perspective.

Additionally, structural flows are anticipated to continue weighing on the SEK.

In conclusion, Danske Bank targets the EUR/SEK exchange rate to reach 11.60 within the next 6-12 months.

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