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Investing.com -- UBS has adjusted its forecast for the EUR/SEK currency pair, extending its end-of-quarter predictions by one quarter while maintaining targets of 10.80, 10.70, and 10.60 through the second quarter of 2026, with a new target of 10.50 for September 2026.
After an early-summer rally triggered by a more dovish-than-expected Riksbank meeting, the EUR/SEK has consolidated below 11.20 in recent weeks.
UBS strategists Clémence Dumoncel and Constantin Bolz expect the downward trend in the pair to continue through the remainder of 2025, though at a slower pace than previously anticipated.
The Riksbank maintained its easing bias at its August meeting, citing economic data that fell short of forecasts.
While Sweden’s large manufacturing sector makes its economy vulnerable to tariffs, this vulnerability is partially offset by optimism surrounding the European fiscal stimulus package.
Global easing conditions are providing favorable support for the Swedish krona, which should continue as the US dollar weakens in coming months.
A resolution to the Ukraine conflict would significantly boost the currency and support further decline in the EUR/SEK pair.
However, risks remain elevated due to unpredictable US trade policies undermining the credibility of trade agreements. Geopolitical risks, though less prominent in headlines, continue to threaten energy-importing economies like Sweden.
UBS identifies resistance levels around 11.20 for the EUR/SEK pair, with support at recent lows of 10.70. The bank cautions that a more aggressive trade war and European recession could push the pair back to 11.50.
In the current environment, UBS recommends using volatility to gain exposure at better levels and suggests selling the upside in the pairing, seeing resistance above 11.20.
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