EUR/SEK: Bearish krona trend to remain in place until bigger shift in Riksbank policy – MUFG

EUR/SEK rises back to pre-pandemic levels around 10.60 as cautious Riksbank leaves the krona vulnerable to further weakness. Economists at MUFG Bank expect the bearish SEK trend of recent months to remain in place in the near-term.

SEK remains sensitive to equity market weakness

“The Riksbank’s reluctance to join other central banks by bringing forward tightening plans leaves the SEK vulnerable to further near-term weakness.”

“A bigger hawkish pivot in Riksbank policy will be required to trigger a reversal.”

“The SEK remains sensitive to equity market weakness as well.”

See: EUR/SEK to wait until mid-2Q before seeing a decisive retrace to 10.40 – ING