EUR/SEK tumbles to lows near 10.55, 200-hour SMA

• The Swedish Krona appreciates to the 10.55 area vs. EUR.
• Prospera survey noted inflation is seen lower in the next years.
• February’s unemployment rate coming up on Thursday.

The Swedish Krona is regaining some ground and reverting part of yesterday’s pullback, now sending EUR/SEK to fresh daily lows in the 10.55 handle, coincident with the 200-hour SMA.

EUR/SEK weaker post-inflation survey

SEK is gathering buying interest despite the latest publication of the Kantar Sifo Prospera survey on inflation expectations and GDP for the next years.

In fact, the survey notes the continuation of the downtrend in the mean of 1-year and 2-year inflation expectations, now seen at 1.9% (from December’s 2.0%) and 2.0% (from 2.1%), while the mean for the 5-year horizon remains steady around the 2.1%.

Regarding the domestic GDP, money market players now see the economy expanding 1.8% in a year’s time (from 2.1%), 1.9% in 2-year (from 2.0%) and 2.2% in the 5-year scenario (unchanged).

In the meantime, the cross is extending the weekly choppy trade, coming down from last week’s 2019 highs near the 10.6500 handle (Friday), all amidst alternating risk appetite trends.

What to look for around SEK

Fundamentals in the Scandinavian economy remain healthy, although the projected global (and particularly the EMU) slowdown is expected to have its say on the performance of the domestic economy in the next months. If we add the recent forecasts for lower GDP, the outlook on the Krona appears cloudy, to say the least. In addition, SEK is also facing extra headwinds as market participants consider it a funding currency when comes to carry trade. Additionally, concerns over the global slowdown and the softer stance from the ECB could encourage the Riksbank to remain ‘lower for longer’, in spite of recent comments by board members suggesting a rate hike this year still remains well on the table.

EUR/SEK levels to consider

As of writing the cross is losing 0.13% at 10.5526 and a break below 10.5374 (21-day SMA) would expose 10.4651 (low Feb.28) and then 10.4036 (low Feb.13). On the flip side, the next up barrier aligns at 10.6314 (2019 high Feb.21) seconded by 10.6476 (2019 high Mar.8) and finally 10.6929 (high May 4 2018).