- EUR / SEK reversed the recent drop and approached 10.20.
- So far, a solid support arises in the 10.10 region.
- The Riksbank kept the policy rate unchanged at 0.00%.
The Swedish krona is cutting back some of recent gains and motivates the EUR / SEK to bounce away from recent lows and approach the 10.20 region on Thursday.
EUR / SEK supported near 10.10
EUR / SEK is posting decent gains after two consecutive daily declines on Thursday, including another test of solid support at the 10.10 area.
In fact, the cross is moving higher after the Riksbank kept the buyback rate unchanged at 0.00% at its meeting. However, the Scandinavian central bank increased its QE program to SEK700 billion (from SEK 500 billion) and it is now expected to run until the end of 2021.
The Riksbank justified its decision to extend and increase its asset purchases due to the impact on the economy of the growing spread of the coronavirus along with tighter restrictions.
In addition, the central bank revised down its forecasts for GDP and inflation and now sees that the economy will contract 4.0% this year and expand 2.6% and 5.0% in 2021 and 2022, respectively. Regarding inflation, the CPI is forecast to increase by 0.4% in 2020, 0.8% in 2021 and 1.2% in 2022.
The repurchase rate remains unchanged at least until the end of 2023.
Technical levels
At the moment, the pair is gaining 0.36% at 10.1586 and a move above 10.2333 (21-day SMA) would target 10.2928 (November 13 high) en route to 10.3474 (55-day SMA). On the downside, the next support lines up at 10.1020 (2020 low, November 10), followed by 10.1249 (monthly low on December 31, 2018) and finally 10.0945 (monthly low on June 15, 2018).
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