Here’s why the USD/SEK rose after the Riksbank interest rate decision

The USD/SEK pair rose slightly after the latest Riksbank interest rate decision. The pair rose to 8.5856, which was the highest level since June 21. It has risen by more than 4% from the lowest level in June.

Riksbank interest rate decision

The Swedish Central Bank made a relatively muted interest rate decision on Wednesday. The bank left interest rates unchanged at 0% and hinted that they will remain low until 2024. It will also continue its quantitative easing (QE) program until the limit reaches SEK 700 billion. 

In the statement, the bank said that it expects that the country’s economy will grow by 4.2%, which was higher than the previous estimate of 3.7%. The members also warned that the bank could keep rates lower for longer if the number of coronavirus cases keep rising. The bank said:

According to Bloomberg, the dovish statement was likely because members wanted to avoid its past mistake when it hiked too fast. In their comments, analysts at ING wrote that:

Looking ahead, the USD/SEK pair will react to the latest US employment numbers that will come out tomorrow. Analysts expect the non-farm payrolls (NFP) to come in at more than 700k as the country continued to recover. They also expect that the unemployment rate dropped to 5.7% in the previous month. 

As such, the USD/SEK rose because of the divergent path between Riksbank and the Fed. While the Riksbank has turned dovish, the Fed delivered a hawkish statement two weeks ago.

USD/SEK technical analysis

The four-hour chart shows that the USDSEK pair has been in a strong bullish trend. It has moved above the first support of the Andrews pitchfork indicator. It has also risen above the 61.8% Fibonacci retracement level. The pair has also moved above the 15-day and 25-day exponential moving averages (EMA). Therefore, the pair will likely keep rising as bulls target the next key resistance at 8.700.