EUR/NOK: We expect EUR/NOK to move temporarily higher in the coming month towards 8.65 on the back of Norges Bank cutting rates by 25bp. We expect the Norwegian economy to hold up well while the oil price gradually rises throughout the year and we therefore view the market pricing of more than two cuts in 2015 as way too dovish. We still expect a re-pricing of Norges Bank, ECB QE and an oil price recovery to drag the cross lower towards 8.50 in 3M, 8.25 in 6M and 8.15 in 12M.
EUR/SEK: The Riksbank going unconventional was a game changer for the markets and thus for SEK prospects. We now expect the repo rate to be lowered by an additional 10bp into negative territory within six months, which will continue to weigh on the krona over the next couple of months as it mitigates the appreciation potential stemming from easy ECB policies. Meanwhile, the perceived economic recovery, which will be further promoted by the Riksbank's move, a more constructive flow picture and valuation, should support SEK in the medium term. We therefore raise our EUR/SEK forecast profile to 9.70 (previously 9.30), 9.70 (9.30), 9.50 (9.20) and 9.30 (9.00) in 1M, 3M, 6M and 12M, respectively.
EUR/DKK: We expect DN to vigorously cap EUR/DKK downside around 7.4440 through FX intervention purchases. We maintain our forecasts of 7.4440 for 1M, 3M, 6M and 12M, respectively.
EUR/GBP: Following the recent rally in GBP, we have lowered the profile for EUR/GBP and we now target EUR/GBP at 0.72 (0.75) in 6M. We expect EUR/GBP to trade around 0.74 in the coming months as downside potential might be counterbalanced by political risks stemming from the UK general election on 7 May. On a 6-12M horizon, we expect EUR/GBP to stabilise and eventually move higher as the eurozone recovers, targeting the cross at 0.73 (0.77) in 12M.
EMEA: Overall we are turning slightly more positive on the Central and Eastern European currencies. Hence, both the HUF and the PLN are getting support from a more positive growth outlook on the back of ECB's monetary easing and a general pick-up in European growth. Furthermore, even though we remain bearish on the RUB we have changed our rouble forecast in a slightly less negative direction on the back of the recent stabilisation of oil prices. That said, the Russian economy is falling into a deep recession and geopolitical tensions remain elevated, so we maintain an overall negative outlook on the rouble.
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