USD/SEK eyes 2008 low amid Sweden growth optimism

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US Dollar (USD) extended slide against the Swedish Krona (SEK) on Wednesday, dragging the USD/SEK to 6.5078. The pair is expected to print multi-year lows, potentially targeting the low of 2008 in medium to long term.

Technical Analysis

USD/SEK is being traded around 6.5080 at 9:30 in London. Major hurdle can be seen around 6.5721, the high of February 21. A break above the 6.5721 resistance area will turn the short term bias to bullish, opening doors for 6.6550, the 76.4% fib level.

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On the downside, the pair is expected to find support around 6.4386, the low of April 02 and then 6.3223, the low of March 19. A break below the 6.3223 support area could push the pair into comparatively stronger bearish trend, exposing the low of 2008.

Sweden Monetary Policy

Today, April 09, Sveriges Riksbank –the central bank of Sweden—will announce its benchmark interest rate decision. According to the consensus of analysts, the central bank is expected to keep the rate unchanged at 0.75% due to favorable economic reports about the economy in the recent past. SEK could show relief rally following the interest rate decision, accelerating the selling pressure on USD/SEK.

Employment Report

On Tuesday, April 22, Statistics Sweden will release the unemployment rate figure. According to median projection of different analysts, the jobless rate declined to 7.3% in March compared with 8.5% in the month before. Better than expected jobless reading will be seen as bearish for USD/SEK and vice versa.

FOMC Minutes

Today the US Central Bank is scheduled to release the minutes from the monetary policy meeting that was held last month in Washington. The minutes give an idea about the future monetary policy stance. Hawkish comments from the Federal Open Market Committee (FOMC) policymakers might spur huge bullish momentum in USD/SEK and vice versa.

US Job Data

Tomorrow the US labor department will release the jobless claims and continuing jobless claims reports. According to forecast of different economists, the number of people who claimed for unemployment incentives in the US dropped to 320K during the week ended on April 04 compared with 326K in the week before, better than expected actual outcome will be seen as bullish for USD/SEK. Similarly, the continuing jobless claims increased to 2.850 million during the week ended on March 28 compared with 2.836 million in the week before, worse than expected figure will be bearish for USD/SEK.

Conclusion

 The pair is heading to prerecession levels despite rapid recover in the US and back to back tapering decisions by the Federal Reserve. USD/SEK might fell below the 6.300 handle in medium to long term.

To contact the writer of this story: Usman Ahmed at usman@forexminute.com