- The Swedish Krona struggles for direction around 10.2300.
- Sweden Industrial Production contracted 0.4% MoM in November.
- The cross meets resistance at the 21-day SMA, weekly peaks.
Today’s better tone around the Swedish Krona is putting EUR/SEK under some downside pressure around the 10.2300 neighbourhood.
EUR/SEK upside falters at 10.2600
After three straight sessions posting gains, the cross is now facing some selling pressure around the 10.2300 area, fading the initial bullish attempt to the 10.2600 region, coincident with the key 21-day SMA.
SEK initially depreciated to weekly lows near the 10.26 handle after Swedish Industrial Production contracted 0.4% inter-month in November, while expanding at an annualized 3.4%. Further data saw Industrial Orders contracting 2.4% on a yearly basis.
Today’s soft note around the single currency appears to be weighing on the cross, although the Krona is expected to remain under some pressure following yesterday’s dovish message from the Riksbank minutes.
What to look for around SEK
Despite the health around the Scandinavian economy looks solid, momentum and fundamentals appear vulnerable and susceptible to some ‘deterioration’ in the near to medium terms. With Core inflation expected to run below the central bank’s forecast and the now tight labour market deflating somewhat, market participants continue to add weigh to the view that the recent rate hike by the Riksbank (the first in seven years) could be a ‘one off’ for a long time vs. some speculations of a second rate hike at some point in H2 2019.
EUR/SEK levels to consider
As of writing the cross is losing 0.05% at 10.2272 and a break below 10.1725 (low Jan.8) would aim for 10.1553 (2019 low Jan.1) and then 10.1249 (monthly low Dec.31 2018). On the upside, the next hurdle aligns at 10.2618 (21-day SMA) seconded by 10.2950 (2019 high Jan.3) and finally 10.3447 (200-day SMA).
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