EUR/SEK Outlook: Bearish, with the rate substantially below its recent average and facing pressure from various factors.
Key drivers:
• Rate gap: The European Central Bank maintains a neutral monetary policy, while the Riksbank's rate is fixed at 1.75%, favoring the SEK over the EUR.
• Risk/commodities: Oil is trading at near 90-day highs, pushing inflation concerns that can negatively affect the euro as energy prices rise.
• One macro factor: Sweden's stable economic growth forecast, along with declining unemployment projections, supports the SEK's strength compared to the EUR.
Range: The EUR/SEK is expected to drift within its recent range, likely remaining around the 90-day lows.
What could change it:
• Upside risk: A shift in ECB policy to a more aggressive stance could strengthen the euro.
• Downside risk: Continued volatility in oil prices and geopolitical tensions could further weaken the euro.