The USD/SEK pair rallied to the highest level since September 2020 ahead of the latest Riksbank interest rate decision. The pair is trading at 9.1122, which is also about 12% above the lowest level this year.
The Riksbank, the world’s oldest central bank, will conclude its monetary policy meeting on Thursday and deliver its decision.
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Analysts expect that the bank will emerge as the most dovish in the developed world. They expect that the bank will leave interest rates at zero and provide hints that these rates will not change until 2024. This is a similar stance like the one the Reserve Bank of Australia has taken.
The dovish rate decision will come at a time when the country’s economy is recovering at a relatively quick rate. For one, inflation has jumped to about 3.1% as oil and gas prices have risen. This was the highest level in 13 years.
Still, like most central banks, Riksbank believes that the trend in higher prices will subside in the coming months. The need for caution will be because of the rising number of Covid-19 cases in the country and in Europe.
Therefore, the USD/SEK pair has rallied because of the overall divergence between the Riksbank and the Federal Reserve. The consensus estimate by analysts is that the Fed will move quicker than expected since the economy is firing on all cylinders.
Data published on Wednesday showed that the country’s inflation remained steady in October. Also, initial jobless claims tumbled to the lowest level in more than 50 years while durable goods orders have risen.
USD/SEK technical analysis
The daily chart shows that the USD/SEK pair has been in a strong bullish trend in the past few weeks. This rally continued after the pair moved above the key resistance level at 8.76, which was the highest level since March this year.
It has managed to move above the 25-day and 50-day moving averages. It is also approaching the 50% Fibonacci retracement level. Therefore, the pair will likely keep rising as bulls target the resistance at 9.2993.
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