Bias: Bearish-to-range-bound, as USD is below the 90-day average and in the lower half of the 3-month range.
Key drivers:
• Rate gap: The Federal Reserve is expected to consider interest rate cuts, while the Riksbank maintains its rate at 1.75%, widening the gap that may favor the SEK.
• Risk/commodities: The current volatility in oil prices could impact global risk appetite, indirectly supporting the SEK if market sentiment shifts positively.
• One macro factor: The recent unemployment report in the U.S. showed a surprise drop, which could influence expectations regarding Fed policy and USD demand.
Range: USD/SEK is likely to hold around current levels as it trades within the recent range, unless significant changes occur.
What could change it:
• Upside risk: Strong U.S. economic data, particularly around employment, could boost USD.
• Downside risk: If geopolitical tensions escalate, leading to increased risk aversion, the SEK may strengthen against the USD.
