The USD/SEK price is little changed was little changed on Tuesday as the market reflected on the latest Riksbank interest rate decision. The pair is trading at 8.3930, which is 1% below the lowest level last week.
The Riksbank monetary policy committee concluded its two-day meeting earlier today. As widely expected, the bank decided to leave interest rates unchanged at 0%. Data published along the report showed that the bank expects that rates will remain unchanged until the second quarter of 2024.
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Riksbank also pledged to continue with its large-scale asset purchase program, also known as quantitative easing. In the program, the bank is buying SEK 700 billion, equivalent to $83 billion. It expects to continue with these purchases until the end of this year.
The bank acknowledged that the Swedish economy is in a fast recovery pace even as the number of coronavirus infections has increased recently. It hopes that the easy money policy will lower the cost of borrowing and stimulate the economy.
The USD/SEK decision came at the same time as the Swiss statistics agency published the latest producer price index (PPI). The data showed that the PPI rose by 1.1% in March after rising by 1.5% in the previous month. On an annualised basis, the factory-gate prices rose by 3.8%, which was significantly higher than the previous month’s 1.3%. Further, the country’s unemployment rate rose from 9.7% to 10%. Commenting on the Riksbank decision, analysts at ING said:
“Yet, we still expect EUR/SEK to move below the 10.00 level this summer as the currency will benefit from the improving eurozone economy and a more synchronised global economic recovery in the second half.”
Looking ahead, the USD/SEK pair will react to the upcoming US consumer confidence and house price index data ahead of the latest Fed interest rate decision.
USD/SEK technical forecast
On the four-hour chart, we see that the USD/SEK pair has been declining in the past few days. The pair is trading at 8.3930, which is slightly above the important support at 8.3567. The decline is being supported strongly by the 50-day exponential moving average (EMA). It is also slightly below the 61.8% Fibonacci retracement level.
Therefore, the pair will likely have a major bearish breakout in the near term. For this to happen, it will need to move below the support at 8.3567. If this happens, the next key level will be the 78.6% retracement at 8.3244.