USD/SEK pulls back after Swedish election but uptrend is still intact

By:
on Sep 12, 2022
  • The USD/SEK price has been in a strong bearish trend recently.
  • It has jumped by more than 20% from the lowest level this year.
  • The next key catalyst will be the upcoming US inflation data.

The USD/SEK price made a strong pullback on Monday after the latest Swedish election. It dropped to a low of 10.44, which was the lowest level since August 18. Krona has risen by more than 4% from the highest level last week.

Swedish political era

The USD/SEK forex rate has been in a strong bearish trend after the weekend election. Early results showed that a group of right-wing parties were heading towards victory.

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Led by Sweden Democrats, the parties campaigned on immigration and crime issues. They hope to lengthen prison sentences and reduce immigration to a minimum. At the same time, they hope to build new nuclear plants in a bid to reduce their reliance on natural gas and coal. The party will become the second-biggest party in Sweden. 

The next key catalyst for the USD/SEK price will be the upcoming Swedish and US consumer inflation data. Sweden, like other European countries, has seen its consumer inflation surge to the highest level in decades. 

Analysts expect that the country’s inflation jumped from 8.5% in July to 9.6% in August. They also see that CPI at constant interest rates surged to 8.6%. In our previous article, we noted that the country’s inflation surged to 8.7% in June,

As a result, Riksbank has maintained a relatively hawkish tone. It has started hiking interest rates and analysts believe that the trend will continue in the coming months.

The pair will also react to the upcoming US consumer and producer inflation data scheduled for Tuesday and Wednesday. Most analysts expect that US inflation eased slightly in August as the price of gasoline eased. Precisely, they expect that the headline inflation fell from 8.5% in July to 8.1% in September. The Fed is expected to be more hawkish even as inflation eases.

USD/SEK forecast

USD/SEK

The daily chart shows that the USD/SEK price has been in a strong bullish trend in the past few months. It has jumped by more than 22% from the lowest level in November last year. Along the way, the pair has moved above the ascending trendline shown in red. 

The pair has moved above the 50-day moving average while the bars of the awesome oscillator have moved slightly downwards. Therefore, the pair will likely continue falling as sellers target the ascending trendline and then resume the bullish trend.

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