Sweden reported stronger-than-expected inflation figures for February this morning. CPIF accelerated more than consensus from 2.2% to 2.9%, with the core measure rising to 3.0% against a 2.7% consensu, ING's FX analyst Francesco Pesole notes.
EUR/SEK to trade only temporarily below 11.0
"The data reinforces the view that the Riksbank may stay on pause at the next meeting and helped EUR/SEK move deeper below 11.00 after breaking crucial resistance overnight. This move is in line with our expectations. We expect EUR/SEK to trade only temporarily below 11.0 as our model now shows almost 3% undervaluation – an indication that a lot of the positives are in the krona’s price."
"Our forecast for the remainder of the year still has EUR/SEK above 11.00 (mostly in the 11.0-11.30 range) as we expect US tariffs to temper with the strong European sentiment to which SEK has a higher beta than the euro itself, and there is also a possibility of some geopolitical risk being priced back in after a largely expected Ukraine-Russia peace deal."
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