USD/SEK forms ascending triangle amid hawkish Fed, Riksbank

The USD/SEK exchange rate moved sideways after the hawkish sentiment by the Federal Reserve and the Riksbank. The pair was trading at 10.80, which was much higher than this month’s low of 10.56. In all, the exchange rate remains a few points below the highest point this year.

Hawkish Fed and Riksbank

Jerome Powell sounded extremely hawkish when he made his speech at the ECB Summit in Portugal. He reiterated that the bank was still considering more rate hikes in the coming months. In his statement, he said that inflation, especially core, was still sticky.

His view is supported by the strong economic data from the US. On Tuesday, data showed that the country’s consumer confidence jumped in July. Consumers are optimistic about the economy since the unemployment rate and inflation are falling.

Additional data revealed that the country’s housing sector is doing well. The house price index rose in April. Further, housing starts, building permits, new, and existing home sales continued doing well. As such, the Fed is managing to have a soft landing.

Meanwhile, the Riksbank decided to hike interest rates again as its battle against inflation continued. The bank hiked rates by 0.25% to 3.75%. It also hinted that the bank will implement at least one more rate hike this year.

The most recent data showed that Swedish inflation stood at 6.7% in May, higher than the bank’s target of 2.0%. The statement added:

Unlike in the United States, the Swiss economy is going through major headwinds. Inflation is not falling fast enough while the housing market is collapsing.

USD/SEK technical analysis

USDSEK chart by TradingView

The 4H chart shows that the USD to SEK exchange rate has been in a bullish trend in the past few days. It has remained above the ascending trendline shown in black. The pair has formed what looks like an ascending triangle pattern.

The USD/SEK price has moved above the 25-period and 50-period moving averages. It also jumped above the 23.6% Fibonacci Retracement level. Therefore, the pair will likely continue rising as buyers target the next resistance level at 10.94, the highest point on June 7th.