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SEK: EURSEK Pierces Trendline Support As Krona Strength Persists

SEK
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EURSEK has pierced trendline support drawn from the December 2023 low, bringing this week’s sell-off to 1.3%. A clear breach of this trendline (11.3574 today) would signal scope for a deeper retracement and a move towards the Oct 1 low at 11.3024.

  • Today’s SEK strength comes despite a relatively subdued session for European equity futures (-0.15% today) and an intraday widening in the 2-year EUR/SEK swap differential (+2bps today to -3.2bps).
  • Zooming out a little, a faster pace of ECB easing relative to the Riksbank may limit recoveries in EURSEK in the short-term, though swings in broader risk sentiment in response to US trade developments remain a risk to the krona.
  • Swedish January flash inflation is due tomorrow at 0700GMT/0800CET, alongside a speech from Governor Thedeen at 0730GMT (though don’t expect much deviation from his rhetoric in the minutes: “the policy rate has probably been lowered sufficiently”).

Figure 1: EURSEK

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EURSEK has pierced trendline support drawn from the December 2023 low, bringing this week’s sell-off to 1.3%. A clear breach of this trendline (11.3574 today) would signal scope for a deeper retracement and a move towards the Oct 1 low at 11.3024.

  • Today’s SEK strength comes despite a relatively subdued session for European equity futures (-0.15% today) and an intraday widening in the 2-year EUR/SEK swap differential (+2bps today to -3.2bps).
  • Zooming out a little, a faster pace of ECB easing relative to the Riksbank may limit recoveries in EURSEK in the short-term, though swings in broader risk sentiment in response to US trade developments remain a risk to the krona.
  • Swedish January flash inflation is due tomorrow at 0700GMT/0800CET, alongside a speech from Governor Thedeen at 0730GMT (though don’t expect much deviation from his rhetoric in the minutes: “the policy rate has probably been lowered sufficiently”).

Figure 1: EURSEK

image