The USD/SEK price is nearing its all-time high ahead of the upcoming Federal Reserve interest rate decision. It rose to 10.15, which was the highest level since April 1 after the latest Swedish consumer price index (CPI) data. It has risen by more than 75% from its lowest level since 2011. On the other hand, the EUR/SEK price rose to 10.60, which was the highest level since May 12th.
Swedish consumer inflation
The Swedish economy is struggling as the country continues its plan to move towards joining NATO. According to the country’s statistics agency, inflation has surged to the highest level since 1991.
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Precisely, the headline consumer price index jumped to 7.3%, which was higher than the median estimate of 7.0%. It was also higher than the previous increase of 6.4%.
On a month-on-month basis, the CPI increased from 0.6% to 1.0% as the price of food and energy prices continued rising.
Meanwhile, the closely watched CPI at constant interest rate rose from 0.6% to 1.0% on a MoM basis and from 6.4% to 7.2%. These were the highest levels in decades.
Therefore, there is a likelihood that the Riksbank will continue embracing a more hawkish tone in the coming months. The bank has already hiked interest rates by 0.25% in April and hinted that it will deliver two to three hikes in 2022.
Now, with inflation surging, analysts believe that the central bank will deliver several 0.50% rate hikes in the coming months.
The USD/SEK price will then react to the upcoming interest rate decision. Analysts expect that the central bank will hike interest rates by 0.50% after data showed that the country’s inflation surged to a 40-year high of 8.6%.
USD/SEK forecast
The four-hour chart shows that the USD to SEK price has been in a strong bullish trend in the past few months. The pair is now moving close to its highest point on record. It is also approaching the upper side of the ascending channel.
Also, the pair has moved above the 25-day and 50-day moving averages while the Relative Strength Index (RSI) has moved above the neutral level at 50.
Therefore, the outlook of the USD/SEK pair is still bullish, with the next key resistance level to watch being at 12.
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Source: https://invezz.com/news/2022/06/14/usd-sek-will-the-krona-crash-continue-as-sweden-inflation-surge/