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UBS released its latest currency market analysis, highlighting expectations for the Euro against the US dollar (EUR/USD) and providing insights into the performance of Scandinavian currencies. The bank maintains a cautious stance on EUR/USD, anticipating a deeper pullback towards their second-quarter target of 1.07.
UBS suggests that current levels of the US dollar against the Japanese yen (USDJPY) are appealing for investors to increase their yen positions, noting that their short-term model indicates a fair value closer to 145.
In the realm of Scandinavian currencies, UBS observes that they continue to outperform, with particular emphasis on the Norwegian krone’s (NOK) strength aligning with the bank’s forecasts. While UBS had anticipated a correction for the Swedish krona (SEK), they remain optimistic about the currency’s medium-term prospects.
Despite near-term vulnerabilities for the SEK, such as exposure to US tariff risks, potential fluctuations in dividend flows, and the possibility of a lower-than-expected Consumer Price Index (CPI) in March, UBS sees a silver lining.
The Swedish government’s announcement last week of increased defense spending is expected to bolster the SEK over the medium term. UBS predicts that this development, combined with the currency’s current position, suggests that any rallies in the EURSEK (the Euro against the Swedish krona) will likely be limited in scope.
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