The SEK has been one of the best-performing currencies versus the USD in recent months, but we are now seeing the USD firm up and expect more upside. We see the USD as a buy on dips or a breakout higher.

SEK Fundamentals

The SEK has been firm against the USD based upon general USD weakness and general euro strength, which the SEK is highly correlated with. The SEK also got a boost from the potential rearmament of Europe and a boost to its defense industry. In relation to its size, Sweden probably has Europe’s biggest armaments sector, but this bullish factor is now priced in.

  In terms of interest rates, the Swedish Riksbank cut its policy rate by 25bps to 2% in June, in line with expectations, as the country's economic recovery slows and inflation eases back. Recent data has shown weaker growth and high unemployment, while inflation has come in line with previous forecasts but is expected to fall slightly below earlier forecasts due to weaker demand.

US Fundamentals

In terms of interest rates, the USD holds a significant advantage and has a more robust economy. The USD had a major sell-off off but now its yield and an economy that has seen data come in above forecast and we are seeing the USD rally back, and it could have far more upside.

EUR SEK Correlation

In terms the SEK it's correlated with the EUR, and EUR/USD is going down in our vie,w and this will wiegh on the SEK

Trading High BETA Currencies

The SEK is a high Beta currency, so we expect USD/SEK to move quicker than EUR/USD so its an attractive pair to trade in terms of its higher volatility

Technical Analysis