USD/SEK at its 4-month high after mixed Swedish retail sales data
- The USD/SEK pair is hovering near its four-month high.
- The strong US dollar has contributed to this price action.
- The market is reacting to the latest Sweden retail sales data
The USD/SEK price is hovering near its highest level since November 23 as the US dollar rally continues. It is trading at 8.6442, which is 6.6% above the lowest level this year.
Swedish krona loses momentum
In 2020, the Swedish krona was one of the best-performing currencies in the developed world. It rose by more than 22% against the US dollar from March to December. This performance was mostly because of the overall weak greenback as the risk-on sentiment spread in the market.
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This year, however, the Swedish krona has lost momentum. It has gained by more than 6% against the US dollar, in part, because of the recent performance of the US bond market.
After dropping in 2020, US bond yields have started to bounce back. Indeed, the yield on the ten-year government bond rose to a 14-month high of 1.74%. The other long and shorter yields also rose.
The rising yields are a sign that forex investors expect the Federal Reserve to turn hawkish as inflation rises. However, in past statements, the Fed has denied having any intentions to hike rates and abandon the easy-money policies in the near term.
The USD/SEK price is reacting to the latest Swedish retail sales data. According to the Swedish statistics agency, the overall retail sales dropped from the previous 4.3% to 0.7%. On an annualised basis, the headline retail sales rose by a year-on-year rate of 4.6%. Earlier on, we also received relatively weak UK retail sales numbers.
Further, the Swedish consumer confidence increased from the previus 97.5 to 98 as more peole in the country cheered the reopening and vaccination drive.
USD/SEK technical forecast
The USD/SEK pair rose to an intraday high of 8.665. On the four-hour chart, this price has moved substantially from the double-bottom at 8.4370. It has also risen above the 25-day and 15-day weighted moving averages while oscillators have also risen. It has also moved above the cup and handle pattern that formed a few weeks ago, Therefore, the pair may keep rising as bulls target the next key resistance level at 8.700.