The USD/SEK pair remained in a tight range after the latest interest rate decision by the Riksbank. The pair is trading at 8.6793, which is a few pips below this week’s high of 8.7445.
Riksbank decision
The Riksbank concluded its two-day monetary policy meeting and did what most analysts were expecting. The bank decided to leave its main interest rate unchanged at 0% as it tries to support the recovering economy. It hinted that it will not tweak its interest rates in the forecast period that moves until the third quarter of 2024.
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At the same time, unlike other comparable economies like New Zealand and Canada, the Riksbank decided to continue its asset repurchase program. Still, the pace of asset purchases will be relatively reduced.
On inflation, the bank expects that the headline CPI will average at 2.0% this year and at 2.1% in 2022. It will then retreat to about 1.8% in 2023. Meanwhile, the economy is expected to rose by 4.7% this year and then pull back to 3.6% in the coming year.
At the same time, Sweden expects that the unemployment rate will average 8.8% this year and then drop to 7.6% in 2022.
The next key catalyst for the USD/SEK pair will be the latest interest rate decision by the Federal Reserve that is scheduled for Wednesday.
Like the Riksbank, the Fed is expected to leave interest rates unchanged between 0% and 0.25%. It is also expected to maintain its asset purchase program intact. However, the bank will likely point to tapering of asset purchases in the near term.
The housing data will also move the pair. Earlier today, numbers revealed that the housing sector remains intact. Building permits rose from 1.63 million in July to 1.728 million in August. At the same time, housing starts rose from more than 1.54 million to 1.615 million.
USD/SEK technical analysis
The daily chart shows that the USD/SEK pair has been in a tight range in the past few days. The pair has already risen by more than 6.8% from the lowest level this year. Also, it moved a few pips above the 25-day and 50-day exponential moving averages. It also faces a major resistance at 8.7667. Therefore, the pair will likely rebound as investors eye this week’s Fed decision.
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