EUR/CAD, EUR/NOK, EUR/SEK Price Outlook As Euro-Area Lockdowns Return

Like the Canadian Dollar, the Norwegian Krone has been buoyed by the rise in oil prices in 2021. In another similarity to recent moves in the Canadian Dollar, the Norges Bank, the central bank of Norway, also rolled out guidance on monetary tightening in recent weeks. At their mid-March policy meeting, Norges Bank officials announced plans to start raising their benchmark rate in the latter half of 2021, pulling forward a hiking cycle that was originally expected to begin in early 2022.

After hitting a ten-year high in March of 2020, EUR/SEK steadily declined through July. In the latter half of the summer, the pair found support around the 10.2500 level before resurging to a multi-month high in late September, around 10.6500. The pair then reversed, continuing back on its downward trend.

EUR/SEK: 1 DAY TIME FRAME (DECEMBER 2017 – MARCH 2021)

EUR/SEK, Euro, Swedish Krona, TradingView

Chart created by Izaac Brook, Source: TradingView

At the beginning of 2021, EUR/SEK fell to its lowest point since February 2018, finding support around the 10.0000 level. After a slight rebound, the pair fell back to this level in February. It is now trading around the 10.1600 level, back around the 2021 highs.

Further moves in EUR/SEK depends on the economic fundamentals of the two currencies. Swedish inflation recently printed well below forecasts for the month of February, falling to 1.5% in February from 1.7% in January and missing the expectations of 1.8%. Inflation in Sweden continues to remain below the central bank’s target, raising fears that the Riksbank will be forced to return to the negative interest rate policy it abandoned at the end of 2019. Such a move will likely drive the Euro higher against the Krona.

In general, further moves in these Euro pairs will also be dependent on the path of the Eurozone economy. A resurgence in Covid cases and slow vaccination rates have led to the reinstatement of lockdown measures across Europe and will act as a drag on the recovery and economic growth.

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