EUR/SEK rally appears overdone – Danske Bank

The recent price action around EUR/SEK suggests that the rally could be overdone, noted Mikael Milhoj, Senior Analyst at Danske Bank.

Key Quotes

“A lower oil price is indirectly a fundamental concern for the SEK, as it adds pressure to the Riksbank’s attempts to reach its inflation target”.

“We cannot rule out that EUR/SEK will increase even higher but we do think that the rally is getting overdone. In particular, we note that the ‘monetary policy gap’ (gap between spot and rate spread implied fair value) is growing further”.