The Swedish Krona (SEK) continues to gain momentum, pulling EUR/SEK to new multi-week lows around 11.3600. The Riksbank followed through with a 25 bps reduction in its policy rate, in line with expectations.
Riksbank Signals More Rate Cuts Ahead
EUR/SEK sees its third consecutive day of declines, breaking below the key 200-day SMA after the Riksbank’s rate cut. The central bank hinted at the possibility of further easing if inflation does not pick up. According to the Riksbank, if inflation remains stagnant, the policy rate could be lowered two or three more times this year, quicker than previously anticipated.
EUR/SEK Key Levels
Currently, EUR/SEK is down by 0.41% at 11.3803. The next support levels to watch include the August low of 11.3655, July low of 11.3055, and June bottom of 11.1420. On the upside, resistance levels are seen at the weekly top of 11.5726, 2024 peak of 11.7782, and November 2023 high of 11.8416.
Analysis:
The recent strengthening of the Swedish Krona against the Euro and US Dollar, coupled with the Riksbank’s decision to cut rates, indicates a potentially more favorable economic environment in Sweden. This could lead to lower borrowing costs for consumers and businesses, potentially boosting spending and investment. However, a prolonged period of low inflation could pose challenges for the economy, prompting further rate cuts to stimulate growth. Investors should closely monitor developments in the Swedish economy and adjust their investment strategies accordingly.