Insights 
VT 
The Swedish economy is a key factor in maintaining the strength of the SEK, with Rabobank’s FX analyst noting that Sweden is one of the few G10 economies not at risk of further central bank easing over the next year.
Rabobank suggests the ECB has completed its rate-cutting cycle, though the market expects around 19 basis points of easing by late next year. In contrast, larger rate cuts are predicted from central banks like the Fed, BoE, RBA, and others within a year.
The Riksbank’s hawkish stance supports the SEK, already the top-performing G10 currency in 2023. Since late 2023, EUR/SEK has been on a downtrend, reversing a long-standing uptrend since 2013. There is potential for further moderate softening of EUR/SEK over 12 months to the 10.60 mark, contingent on improved Swedish economic data.
Next week’s Swedish Q3 GDP and September retail sales are critical for signs of economic activity improvements. Assuming no further Riksbank rate cuts, selling EUR/SEK on rallies is advised. The 200-day SMA at EUR/SEK 11.08 could offer resistance.
We see the Swedish Krona as having an advantage because its central bank, the Riksbank, is one of the few expected to hold interest rates firm over the next year. Recent data from Statistics Sweden showed September’s CPIF inflation holding at 2.3%, justifying this stance. This contrasts with the European Central Bank, where markets are pricing in further easing as the latest flash HICP estimate for October 2025 fell to 1.8%.
However, continued strength in the SEK depends heavily on solid Swedish economic numbers, as much of the Riksbank’s hawkish policy is already reflected in the current price. The market is anxiously awaiting next week’s Q3 GDP data, following a tepid 0.2% expansion in Q2 2025. A positive surprise here would be necessary to push the Krona significantly stronger.
It is important to remember that the SEK has already been the best-performing G10 currency this year, with EUR/SEK in a downtrend since the end of 2023. We saw a similar strong run back in the 2017-2018 period that eventually faced a significant correction, so some caution is warranted. This suggests that simply buying the Krona now might be chasing a trade that has already matured.
Given this, the strategy is to sell EUR/SEK on any upward movements, especially as it approaches technical resistance. For derivative traders, this could involve buying EUR/SEK put options or establishing bear call spreads when the pair rallies towards its 200-day moving average near 11.08. This approach allows participation in the expected downtrend while managing the risk of a short-term price spike.
This strategy aligns with a potential moderate decline in EUR/SEK over the next year. Options traders could look at longer-dated contracts that expire in six to twelve months. This would position them for a potential move toward the 10.60 area, should the Swedish economy prove resilient.
