USD/SEK: Swedish krona spikes after Riksbank interest rate decision.

The USD/SEK price dropped today after the Riksbank delivered its first interest rate decision of the year. The pair is trading at 8.29, which is 2.25% below last Friday’s high of 8.48. The EUR/SEK dropped to 10.06 while the GBP/SEK fell to 11.48.

Riksbank decision

Riksbank, the world’s oldest bank, delivered its first interest rate decision of the year today. As widely expected, the bank decided to leave the interest rate unchanged at 0.0%. It has left them unchanged in the past six consecutive meetings.

In addition, the bank said that it will continue with its 700 billion SEK quantitative easing program. Still, the bank expressed optimism that the country’s economy will recover faster than expected. It pointed to the manufacturing and services sector that are being more resilient this year. The bank said:

The USD/SEK has been on a steep downward trend because of the weaker US dollar. In fact, the Swedish krona has been the strongest dollar index constituent currency in the past few days. 

This performance is because analysts expect the Riksbank to be among the first major central banks to hike interest rates, possibly in 2022. They also expect the Nordic country to have a faster recovery as the region’s economy recovers.

Meanwhile, the overall weaker US dollar has also contributed to the USD/SEK performance. The currency has dropped because of the actions of the Federal Reserve and the ongoing discussions about stimulus. Indeed, the government is in the process of passing a $1.9 trillion in addition to the $900 billion it passed in January. 

USD/SEK technical outlook

On the four-hour chart, we see that the USD/SEK pair was on a strong uptrend a few weeks ago. This led it to a high of 8.40. The trend reversed last Friday after the weak US employment numbers. The price has moved below the 25-day moving average and the Ichimoku cloud. Therefore, in the near term, the pair may continue falling as bears target the next support at 8.25.