Sweden’s Riksbank doesn’t expect inflation to be close to their 2% target until 2023. However earlier, Sweden released inflation data. Their CPIF, the Riksbank preferred measure of inflation, was 1.7% in January, up from 0.5% in December. Should the Riskbank be worried at inflation jumped to near their 2% target, or was this a one-off event?
USD/SEK has been trading in a descending wedge since the pandemic highs on March 23rd. Price began moving sideways and broke above the top descending trendline of the wedge and put in a recent high of 8.4811 on February 5th.
Although one data print does not equal a trend, inflation did rise in Sweden last month, by a lot! However, USD/SEK traders seem more interested in the US Dollar, as the pair had recently broken out of a descending wedge. A move to the 38.2% Fibonacci retracement level is a reasonable expectation.
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