USD/SEK: fundamental review & forecast

USD/SEK rates reached unprecedented heights and exceeded all forecasts. There is a worsening in the economic situation in Sweden, with unemployment rising to 7.7% in August versus 6.2% a month earlier. However, in September, the long-awaited consolidation came at a level above $11. The Swedish Riksbank nevertheless decided to intervene in the situation and announced hedging of 25% of foreign exchange reserves, and also announced an increase in the interest rate, with perspective of further growth to combat inflation. Thus, the rate was 4%, which is still less than the average for Western countries, but given the rise in unemployment, it puts more pressure on the economy.

The krona was under pressure again this week as the US Federal Reserve confirmed its intention to hike rates this year. In other currency pairs, the dollar strengthened noticeably on this news, but this did not happen in the situation with SEK. This is not only due to the Riksbank's response measures, but also a sign of overbought, when investors are not ready for higher prices and all factors have already been factored into the price.

Most technical analysis indicators indicate the effectiveness of Buys, but we are still cautious about such transactions, knowing that further growth will be difficult, which is already visible on the chart. In fact, we can see the formation of a sideways trend. In this situation, we will still take a risk and open Sell trades, since they have huge potential while the drawdown is considered limited.