USD/SEK Pulls Back as Sweden Inflation and DXY Index Fall
Invezz.com – The exchange rate slid lower after the latest Swedish Consumer Price Index (CPI). The pair fell to a low of 10.25, which was below the year-to-date high of 10.77. It has fallen more than 10% below the highest level in 2022.
Swedish inflation slips
The latest SEK news came from Sweden. According to the country’s statistics agency, the general consumer price index fell from 1.1% in February to 0.6% in March. This decline was worse than the median estimate of 1.0%.
Inflation also fell year on year. It fell from 12% in February to 10.6% in March. Again, this was a larger decline than the median estimate of 11.1%.
Meanwhile, the closely watched CPI at constant interest rates fell to 0.2% and 8.0% MoM and YoY, respectively. The annual drop was the lowest in months.
These numbers show that conditions in Sweden are improving even as inflation remains at the highest level in decades. Therefore, there is a chance that the Riksbank will take a wait-and-see attitude when it makes its decision this month.
Recent data has shown that the Swedish economy is struggling as the unemployment rate continues to rise. The housing sector has been one of the worst performers. After years of rising, home prices in the country have moved into a correction zone.
In a note last week, analysts at Danske Bank warned that prices will have to fall 25% from top to bottom. This means that the price drop is only half over. Nordea (ST:), for its part, estimates that prices will plummet by 20%.
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Still, the biggest catalyst for USD/SEK is the weaker US dollar. The dollar index has plunged to around $100 as the Fed signaled a pivot.
Technical analysis USD/SEK
TradingView USDSEK chart
The daily chart shows that the USD to SEK exchange rate has had a strong downward trend in recent days. It has moved below the 50-day moving average and is approaching the important support at $10.15.
The Relative Strength Index (RSI) has moved below the neutral point. Therefore, the pair is likely to continue falling as sellers target the next key support at 10. A move above the resistance at 10.50 will invalidate the bearish view.
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This article was originally published by Invezz.com
