USD/SEK and EUR/SEK Outlook for 2026: Bank of America Remains Bullish on the Krona

Bank of America expects the Swedish krona to continue strengthening in 2026, while maintaining a degree of caution in the near term following the currency’s recent gains. The bank has reaffirmed its year-end forecasts of EUR/SEK at 10.50 and USD/SEK at 8.61.

According to the bank’s analysts, both external and domestic factors are providing support for the krona. On the external side, they anticipate ongoing weakness in the U.S. dollar, with EUR/USD projected to reach 1.22 by the end of the year. U.S. economic growth is expected to remain solid at around 2.4%, while easing measures from China are anticipated in late first quarter or early second quarter.

The krona may also benefit from Sweden’s close trade relationship with Germany, as well as the country’s defense exports, which are estimated to account for approximately 0.7% of GDP in 2025.

Domestically, Bank of America forecasts that Sweden’s economic growth will outperform that of the euro area, with growth of 2.1% compared with 1%, as Swedish consumers continue to recover. The 2026 budget bill includes roughly SEK 80 billion in additional spending, equivalent to about 1.2% of GDP, with approximately SEK 50 billion allocated directly toward supporting consumers.

The Swedish krona has been the strongest-performing currency since late November, appreciating more rapidly than Bank of America had expected. This strength has been driven by robust domestic economic data, a more hawkish repricing of expectations for the Riksbank, and a softer U.S. dollar. Despite this, the bank’s economists continue to project a flat policy path for the Riksbank, viewing interest rate hikes as more likely in 2027 rather than in 2026.

While Bank of America expresses some near-term caution due to the risk of crowded positioning among hedge funds, it sees any pullbacks in the krona against both the euro and the U.S. dollar as attractive buying opportunities. The bank remains “confidently bullish” on the Swedish krona versus the euro and the dollar, though it does not hold the same positive view against the Norwegian krone.