EUR/SEK room for further upside – Danske Bank

In opinion of Stefan Mellin, Senior Analyst at Danske Bank, there is still room for further weakness around the Swedish Krona.

Key Quotes

“The strong EUR/SEK rally with a break of key resistance levels surprised and we would not rule out that it has further to run”.

“However, we also note that the pair is looking increasingly overbought technically and relative to our short term financial models”.

“Stretched valuation is a strong argument for lower levels but the question is when this comes into play. The cyclical backdrop is less favourable for the SEK but it could be that this is already in the price”.

“On the back of the recent selloff in the SEK we raise the forecast profile to 9.70 (9.40), 9.50 (9.30), 9.40 (9.30) and 9.20 (9.10) in 1M, 3M, 6M and 12M, respectively”.