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EUR/SEK trades near 2-week high as Riksbank may cut sooner

The EUR/SEK currency pair traded little changed in proximity to recent 2-week peak on Tuesday, after Sweden’s Riksbank indicated last week interest rates might be cut sooner than previously expected.

Riksbank kept its key policy rate intact at 4.0% at its February meeting, in line with market expectations.

The central bank reiterated that past rate hikes had alleviated concerns over high inflation.

The bank’s Executive Board said it saw less risk of inflation becoming entrenched at dangerously high levels.

Riksbank also suggested that a rate cut could come earlier than previously expected, possibly even to the first half of this year.

“We would not completely rule out a first rate cut in March…but think May is still more likely,” Capital Economics said in a client note.

Capital Economics expects rate cuts of 100 basis points to 3.0% by the end of 2024 and more cuts to 2.5% by the end of 2025.

Meanwhile, in terms of macro data, Euro traders will be paying attention to the December report on Eurozone retail sales due out at 10:00 GMT today.

As of 8:44 GMT on Tuesday the EUR/SEK currency pair was edging up 0.13% to trade at 11.4003. Yesterday the exotic Forex pair went up as high as 11.4017. The latter has been the pair’s strongest level since January 22nd (11.4216).

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