Sweden’s inflation rate (CPIF) for October reached 3.1%, which was higher than expected. Core inflation was slightly above consensus at 2.8%. This suggests that the Riksbank is not likely to cut rates again soon. The EUR/SEK market reacted very little since traders had not anticipated any further cuts. This data indicates a bearish outlook for EUR/SEK, with a target of 10.90 in the short term.

Market Insights And Strategies

The FXStreet Insight Team shares expert market insights, including commercial notes and extra observations. They offer daily analysis through the Orange Juice Newsletter, which requires subscription terms agreement. The discussion includes potential risks for a USD correction and a stable Bank of England interest rate amid ongoing inflation pressures. Other highlights cover EUR/USD trends, gold recovery, and GBP/USD performance influenced by policy decisions. This information is meant for guidance only and does not constitute a recommendation. It points out the risks involved in market investments and emphasizes the importance of personal research. FXStreet and the author are not responsible for any errors or losses arising from this content.

Inflation And Currency Market Dynamics

Sweden’s inflation for October was 3.1%, higher than expected and above the Riksbank’s 2% goal. This confirms the central bank’s stance that they will not rush to lower the policy rate from 3.75%. The currency market had already accounted for this, leading to a limited immediate reaction. A crucial factor for the Krona is the growing difference between the Riksbank’s position and that of the European Central Bank (ECB). The ECB has reduced its main rate twice since early 2023, now at 3.25% to aid a sluggish Eurozone economy. This creates an appeal for holding the Krona over the Euro, supporting our bearish outlook. For derivative traders, we maintain a bearish view on the EUR/SEK pair. The easiest path seems to be downward, especially since the pair could not break above 11.30 last month. We aim for a movement towards 10.90 in the coming weeks, a level not seen since early 2024. A strategic move would be to buy EUR/SEK put options. This allows you the right to sell the pair at a predetermined price, making it easier to profit from a decline while limiting your maximum loss to the premium paid. Look for December expiry puts with a strike price around 11.00 to take advantage of this predicted shift. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now