UBS sees Swedish krona strengthening against the euro

UBS Switzerland AG said the Swedish krona should continue to gain against the euro as falling global yields and lower energy prices remove key headwinds for the currency.

The bank maintained its EUR/SEK forecasts at 11.00 for December, 10.90 for March 2027, 10.70 for June 2027, and 10.60 for September 2027, according to a report from strategists Clémence Dumoncel and Constantin Bolz.

The krona has strengthened since September, with EUR/SEK moving below 11.00. The decline in global yields has reduced pressure on lower-yielding currencies like the Swedish krona, while falling energy prices removed another headwind, UBS said.

Sweden’s economy remains robust, with manufacturing outperforming and confidence indicators pointing to solid growth, the bank noted.

The Riksbank has delivered a rate hike and is expected to tighten once more, supported by firmer underlying inflation and its focus on headline inflation excluding temporary tax effects. UBS expects one more rate hike from the Riksbank next year.

The combination of lower global yields, stable energy prices and tighter Riksbank policy has improved the currency’s fundamental backdrop, UBS said.

The bank identified 10.75 as the next key downside level for EUR/SEK. On the upside, the 11.15 area should provide resistance.

UBS noted the main risks to further krona appreciation are a renewed rise in global yields or energy prices, or the Riksbank failing to deliver the additional tightening currently expected.