Facts:
- EURSEK has been trading near oversold levels for over a month (RSI < 30).
- The price has significantly deviated from the 200-day moving average, falling below two standard deviations (Bollinger Bands).
Recommendation:
- Trade: Long position (BUY) on EURSEK at market price.
- Target Price (Take Profit; TP): 11.0780 (TP1), 11.1992 (TP2).
- Stop Loss (SL): 10.8553.
Source: xStation5
Opinion:
The Swedish krona has been strengthening against the euro since the beginning of 2025 in response to monetary policy adjustments for both currencies. The rate-cutting cycle in Sweden began a month earlier (May 2024) than in the Eurozone, and inflation quickly fell below the Riksbank’s 2% target (August), reducing pressure for further cuts. This environment favored the Swedish currency. However, a recent upside surprise in inflation data accelerated the decline in the already oversold EURSEK.
Considering Riksbank’s Breman’s comment that inflation risks exist “both to the upside and downside” and that the 10-year bond spread between Sweden and Germany does not justify such a sharp EURSEK selloff, a mean reversion is expected before any fundamental shift occurs (e.g., further inflation readings). In the past week, the market has also adjusted its expectations for ECB policy, significantly lowering the probability of an April rate cut (currently at 50%). Additionally, EURSEK rebounded by 0.6% in one session after hitting a recent low and has since consistently opened above 10.92, indicating strong demand in this area.
Methodology:
This recommendation is based on technical analysis of the EURSEK contract and fundamental analysis of central bank policies in the relevant economies. The Take Profit levels were determined using Fibonacci retracement levels (TP1: 23.6% and TP2: 38.2%), aligning with key resistances—namely the 20-day exponential moving average (EMA20, light purple; TP1) and the local high before the inflation data release (TP2). The Stop Loss is set at a 1:1 ratio to TP1, slightly below the last low (price action) to prevent premature position closure before a potential rebound. The recommendation is driven by the significant price deviation from the still-flat 200-day moving average (SMA200, dark purple), which reflects the long-term trend.
