Mapping the Market: Swedish krona on the verge of deeper losses
By Robert Fullem
Sept 17 (Reuters) - The Swedish currency has been weakening in fits and starts against the dollar since late January, and technical analysis indicates the krona could be on the verge of deeper losses that unravel the rally it enjoyed for much of the previous year.
Click here for a more detailed chart.
The krona is one of six currencies in the dollar index, a closely watched gauge of the U.S. currency in the foreign exchange market. It is usually quoted in krona per dollar, meaning that it weakens as the chart of its price rises, and vice versa.
This year, the dollar has risen more than 12% against the krona, trough to peak, especially since the Iran war hurt global investor sentiment – traditionally an important driver for the Swedish currency. Relatively low interest rates in the Nordic country have also made it less attractive to hold the krona, while a tight election may not have helped sentiment either.
Dollar gains have already breached a descending trendline drawn from its February 3, 2025 peak of 11.3193, according to data supplied by LSEG. Technical analysts use trendlines, which are drawn from key price points, to visualize market direction and identify where buyers or sellers may become more active.
Surpassing that trendline earlier this month indicated krona selling was gaining momentum. It also brought the exchange rate to a congestion zone near 9.80, an area where the currency previously stopped – most recently in June and July, but also in 2025.
The chart also suggests that what’s known as an inverted head-and-shoulders pattern may be forming. This pattern usually signals the reversal of a downtrend and start of a bullish one – in this case the conclusion of the dollar’s February 2025-January 2026 fall versus the krona.
A decisive break in the dollar above the area near 9.80 krona, which appeared to be underway as the dollar rallied after the Federal Reserve raised interest rates on Wednesday, would complete the formation and lead analysts to anticipate a move back toward the 2025 high near 11.00.
However, if the krona manages to pull the dollar back below 9.80, traders would increasingly anticipate a drop to 9.40 before setting sights on its year-to-date low of 8.7348.
What the chart shows:
Krona slowly losing 2025 rally
Congestion zone near 9.80 area
Conclusive dollar break above 9.80 targets 11.00; reversal aims at 9.40, 8.7348
(Mapping the Market is a daily column written by Reuters journalists. The commentary is based on a technical analysis of financial charts, which helps assess the likelihood of future price moves but does not guarantee the outcome. The column does not constitute investment advice or trading recommendations. )