EUR/SEK rises to 6-month highs around 10.8500

• The Swedish krona depreciates to multi-month lows against the euro.
• The Riksbank unexpectedly raised interest rates by 100 basis points on Tuesday.
• The next upside barrier is at the 2022 highs around 10.90.

The Swedish currency loses more ground against the euro and raises the EUR/SEK to fresh 6-month highs around 10.8500 following Riksbank interest rate decision.

EUR/SEK strengthens after Riksbank interest rate decision

EUR/SEK rises despite an unexpected one-point interest rate hike by the Riksbank at its meeting on Tuesday.

Indeed, the Scandinavian central bank increased the official interest rate to 1.75% (from 0.75%) due to the increasing risks that inflation will consolidate. To bring inflation back to the bank’s target, the Riksbank left the door open for further rate hikes at upcoming meetings.

The central bank now considers that the official interest rate will stand at 2.5% within a year -a little higher than the 2.0% announced at the June meeting-, although with inflation at three-decade highs, participants in The market believes that rates could be around 3.5% by the end of 2023.

The Riksbank revised its inflation and growth forecasts and now expects the CPIF to stand at 7.8% this year and 5.1% in 2023, while the economy is expected to expand by 2.7% in 2022 and contract by 0.7 % next year.

Technical levels

So far the pair is up 0.38% at 10.8360 and a break above 10.8489 (Monthly High 20 Sep) would expose 10.9049 (2022 High 7 Mar) and then 10.9746 (21 Apr 2021 High) . On the other hand, next support emerges at 10.5984 (Monthly Low Sep 20), followed by 10.5374 (Weekly Low Aug 26) and finally 10.4917 (200-Day SMA).