ING’s baseline scenario is moderately bearish for EUR/SEK, and expect to see sub-10.50 levels by 3Q23 before a 4Q rebound.

SEK should benefit from the improvement in Eurozone's growth picture

“We are moderately bearish on EUR/SEK in 2023 given the projected improvement in the Eurozone’s economic outlook and in risk sentiment.”

“We expect EUR/SEK to trend lower and move sustainably below 11.00 by the end of the first quarter as the Riksbank hikes by 50 bps and signals more tightening, while European sentiment improves. Then, we expect EUR/SEK to test the 10.00/10.50 trading range in the third quarter, when Fed rate cuts could give high-beta currencies like SEK an advantage over the EUR, and the beneficial effects for the Krona of an improved European economic outlook emerge.” 

“SEK could experience some weakness towards the end of the year – i.e. EUR/SEK moving back above 10.50 – as colder weather could bring higher energy prices and a deterioration in risk sentiment.”

“It's important to note that this profile embeds our view for a rather strong EUR in 2023. We expect to see larger SEK gains against the Dollar.”