Credit: REUTERS/Scanpix SwedenAug 12 (Reuters) - Friday price action suggests Swedish crown traders were looking for an excuse to book profits on SEK longs and a softer than expected return for Swedish CPIF may have triggered a climb in EUR/SEK. However, the Riksbank is unlikely to alter its hawkish rate path trajectory and this will limit SEK losses.
EUR/SEK recorded a bullish candlestick engulfing line on Aug. 9 and the subsequent climb from 10.3395 has confirmed the reversal signal. The market has turned up the trend reversal heat today by taking the price close to the 200-day moving average line at 10.4307.
A minimum correction reading taken off the 10.8105-10.3395 July 5 to Aug. 9 drop provides a bull target at 10.4507. The EUR still has a mountain to climb as it attempts to retrace more of the 4.36% one-month drop.
Despite the implications for Swedish economic growth, the Riksbank is still likely to deliver a big 75-basis-point rate hike in September and move another 50 basis points in November. The rate outlook could slow SEK depreciation but for the near-term the market looks to be in adjustment mode.
For more click on FXBUZ
EUR/SEK Daily Candle Chart: https://tmsnrt.rs/3zKhRBO
(Peter Stoneham is a Reuters market analyst. The views expressed are his own)
((peter.stoneham@thomsonreuters.com))
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
