UBS Switzerland AG expects the Swedish krona to keep gaining against the euro as falling global yields and lower energy prices remove headwinds. The bank kept its EUR/SEK forecasts unchanged, with 10.60 targeted for September 2027. It flags renewed yield or energy price rises as the main risks.
UBS Switzerland AG said the Swedish krona should continue to gain against the euro because falling global yields and lower energy prices remove key headwinds for the currency.
The bank maintained its EUR/SEK forecasts at 11.00 for December, 10.90 for March 2027, 10.70 for June 2027, and 10.60 for September 2027, according to a report from strategists Clémence Dumoncel and Constantin Bolz.
Lower yields and energy prices help the krona
The krona has strengthened since September, with EUR/SEK moving below 11.00. UBS said the decline in global yields has reduced pressure on lower-yielding currencies like the krona, while falling energy prices removed another headwind.
The bank also described Sweden's economy as robust. It noted that manufacturing is outperforming and that confidence indicators point to solid growth.
Riksbank policy and the krona's backdrop
The Riksbank has delivered a rate hike and is expected to tighten once more, supported by firmer underlying inflation and its focus on headline inflation excluding temporary tax effects. UBS expects one more rate hike from the Riksbank next year.
UBS said the combination of lower global yields, stable energy prices and tighter Riksbank policy has improved the currency's fundamental backdrop.
Key levels and risks for EUR/SEK
The bank identified 10.75 as the next key downside level for EUR/SEK. On the upside, the 11.15 area should provide resistance.
However, UBS noted that the main risks to further krona appreciation are a renewed rise in global yields or energy prices, or the Riksbank failing to deliver the additional tightening currently expected.
Source: Investing.com
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