EUR/SEK: 9.80 a strong resistance to be breached – ING

Petr Krpata, Research Analyst at ING sees the EUR/SEK 9.8000 level as a very strong resistance unlikely to be breached.

Key Quotes

“While SEK funding costs look attractive, we don’t expect the krona to turn into a global funding currency given (a) its low liquidity; (b) upside risks to EUR/USD which make European FX unattractive to short.”

“While Swedish banks are at risk of a downgrade on the back of the perceived high household debt levels (with their Canadian and Australian peers already downgraded), we expect cheap SEK valuation to provide a cushion to the potential SEK downside.”

“The inflation near to the target and growing divisions among Riksbank board members suggest that the insufficient extension of QE for 2H17 should not affect SEK much. EUR/SEK to converge towards the 9.50 level in coming months.”