Will the krona crash continue when Swedish inflation rises?
The USD / SEK exchange rate is approaching its record high level ahead of the forthcoming interest rate decision from the Federal Reserve. It rose to 10.15, which was the highest level since April 1 after the latest Swedish consumer price index (CPI). 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 12 May.
Swedish consumer inflation
The Swedish economy is struggling as the country continues its plan to join NATO. According to the country’s statistical office, inflation has risen to its highest level since 1991.
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Exactly, the overall 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 monthly basis, the CPI increased from 0.6% to 1.0% as food and energy prices continued to rise.
At the same time, the closely monitored CPI rose at constant interest rates from 0.6% to 1.0% on a monthly basis and from 6.4% to 7.2%. These were the highest levels in decades.
Therefore, there is a probability that the Riksbank will continue to adopt one more hawkish tone in the coming months. The bank has already raised interest rates by 0.25% in April and indicated that it will deliver two to three increases in 2022.
Now, with rising inflation, analysts believe 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 the central bank to raise interest rates by 0.50% after data showed that the country’s inflation rose to a 40-year high of 8.6%.
USD / SEK forecast
![USD / SEK](https://invezz.com/wp-content/uploads/2022/06/usdsek-1024x495.png)
The four-hour chart shows that the USD at the SEK price has been in a strong bullish trend in recent months. The pair is now moving near its highest point ever. It also approaches the upper side of the upward channel.
In addition, 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 of 50.
Therefore, the outlook for the USD / SEK pair is still bullish, with the next important resistance level to be seen being 12.
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