- EUR / SEK tested the 200-day SMA near 10.1800.
- The Riksbank left the key rate unchanged early Thursday.
- The central bank delivered a dovish message at its event.
The Swedish krona reverses some of the recent strength and helps the EUR / SEK to resume the rise on Thursday.
EUR / SEK rises after Riksbank’s dovish message
The EUR / SEK now leaves behind two daily pullbacks in a row and manages to retest the key 200-day SMA at the 10.1800 area, only to lose some momentum soon after.
The cross’s corrective move came after the Riksbank issued a dovish message at its monetary policy meeting on Thursday.
Indeed, the Nordic central bank advocated the continuation of the current accommodative monetary policy stance, although it revised up its forecasts for GDP to 4.2% in 2021 (from 3.7%) and 3.7% in 2022 (from 36%). As for inflation, the Riksbank now sees the CPIF at 1.8% this year and 1.7% the next, up from 1.5% and 1.4%, respectively.
Additionally, the Riksbank noted that inflationary pressures are expected to accelerate in the coming years along with a stronger economy. The central bank sees the key rate at current levels for the entire forecast period.
What to look for around SEK
The growth prospects for the Swedish economy continue to improve and continue to be supported by strong results on key fundamentals, which in turn are expected to provide additional support to the SEK in the coming months. In this auspicious economic context, the Riksbank’s persistent accommodative stance is somewhat surprising, as well as the absence of other signals in its message (such as gradual reduction prospects?). Meanwhile, the SEK is expected to keep a close eye on inflation developments, as the Riksbank now expects consumer prices to rise in the coming months.
Technical levels
So far, the pair is gaining 0.23% at 10.1621 and a breakout of 10.1753 (200-day SMA) would expose 10.2402 (June 18 monthly high) before 10.2964 (April 5, 2021 high). On the other hand, the next support emerges at 10.1006 (June 24 low) followed by 10.0815 (April 19 low) and finally 10.0401 (June 10 low).
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