• USD/SEK increased to 11.247, seeing a 1% gains and then retreated to 11.152.
• The Riksbank hiked to 4%, leaving the door open for further hikes.
• US yields continue to rise, benefiting the USD.

On Thursday’s session, the USD/SEK climbed to its highest level since October 2022, towards 11.247, seeing 1% daily gains, but failed to hold its momentum and settled at 11.152. On the SEK's side, the Swedish Riksbank hiked rates by 25 bps and sounded hawkish, while on the USD side, the Greenback eased during the American session, and seems to be consolidating gains.

Investors assess Riksbank and Fed decisions

The Swedish Riksbank announced on Thursday that it would hike rates from 3.75% to 4% as widely anticipated. In the policy statement, the bank commented that progress was being made, but inflation remained too high, noting that further hikes may be necessary. In the meantime, markets are discounting that the Riksbank will deliver one final hike in November to end the tightening cycle, mainly due to concerns over the health of the Swedish economy, amongst the worst performers in Europe.

On the US side, the Federal Reserve (Fed) held rates steady on Wednesday. Still, their Summary of Economic Projections (SEP) revealed that the median rate forecast of the Federal Open Market Committee (FOMC) members stood at 5.6% for 2023, meaning that one more hike in on the table. In addition, the rate projections 2024 were revised to 5.1% and virtually delayed rate cuts. These hawkish projections boosted the US yields, which trade in multi-year highs as investors are bracing for one more hike by the Fed and rates being higher for longer. The 10-year bond yield reached 4.47% while the two and 5-year yield rose to 5.14% and 4.61%, respectively. That being said, the DXY index found support at a high near 105.70 and eased to 105.30 but the expectations of a more aggressive Fed will likely limit its losses.

USD/SEK Levels to watch 

 The USD/SEK daily chart signals a bullish sentiment for the short term. The Relative Strength Index (RSI) is favourably positioned in positive territory above its midline, reflecting an upward movement. Similarly, Moving Average Convergence Divergence (MACD) depicts green bars, affirming the bullish momentum. In addition, the pair is above the 20,100,200-day Simple Moving Average (SMA), implying that the bulls retain control on a broader scale.

Support levels: 11.150, 11.070 (20-day SMA), 11.000.
Resistance levels: 11.289, 11.300, 11.406.

USD/SEK Daily Chart