Swedish krona immune to volatility?

2 May 2020

cover-blog-economie

One euro currently buys around 10.93 Swedish krona. When assessing the EUR/SEK currency pair trend from a long-term perspective, it becomes apparent that — counting back to the end of 1976 — the Swedish krona has halved in value. In other words: over the period from 1977 up to the end of 2008, the currency pair doubled from EUR/SEK 5.0159 to EUR/SEK 10.9235 at the end of 2008.

Viewed in hindsight, the end of 2008 was a volatile period, due to the occurrence of an international banking crisis. The monthly price chart clearly shows the effect this crisis had on the value of the euro versus the Swedish krona. In the years that followed, the euro suddenly came under pressure due to increasing tension in relation to European national debts, especially in Mediterranean countries. This sentiment only went into reverse in March 2009, when the currency pair’s highest every value was recorded at EUR/SEK 11.786. After this point, the euro lost nearly a third of its value compared to the Swedish krona.

Once the euro crisis had abated, confidence in the euro started to grow, to the detriment of the Swedish krona. This led to a rising trend channel, in which EUR/SEK continues to evolve in a process of higher troughs and higher peaks. In March this year, the volatility of the pair suddenly increased, as demonstrated by a technical indicator known as “Average True Range” (ATR). Three EUR/SEK measurements were taken, being:

  • the range between the highest value and the lowest value,
  • the difference between the closing value in February compared to the highest value in March, and
  • the difference between the closing value in February compared to the closing value in March this year. 

The average biggest range of the three measurements is shown on the ATR bar chart. Now that a 2008-style crisis appears to be upon us again, an upsurge towards EUR/SEK 11.78 — as at the start of 2009 — is possible once again. As a reminder, in the first few months of 2009, the currency pair fluctuated between EUR/SEK 10.41 and EUR/SEK 11.78. After that period, the dust settled and the euro started to fall.

eursek 230420

EUR/USD

Following the wild fluctuations in EUR/USD, swings are getting smaller and the selling pressure on the euro is becoming more evident

EUR/USD on an hourly basis, updated to 22 April 2020: 

eurusd 220420 ibanfirst

EUR/JPY threatens support

The euro has weakened against the Japanese yen and is threatening to sink below its 2019 nadir to EUR/JPY 111 this year

EUR/JPY since 2018

eurjpy 2204 ibanfirst

This marketing information was compiled by Edward Loef (mail@edwardloef.com). This blog post reflects Edward Loef's opinion in his capacity as Certified Financial Technician. This information is not intended as professional investment advice or as a recommendation to make certain investments through iBanFirst. It is intended as information provided to private individuals and not as advice for making commercial decisions. The information is explicitly not intended as an offer to buy or sell products. If you enter into a transaction with iBanFirst, we strongly advise you to determine the relevance of this information to your transaction and to take into account your experience, knowledge, financial capabilities, investment objectives and risk appetite.

Topics: News Economy EUR-SEK

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