USD/SEK Outlook: Bearish, as the rate is significantly below its recent average and near recent lows amid increasing pressures.
Key drivers:
• Rate gap: The Federal Reserve is expected to cut interest rates multiple times in 2026, while the Riksbank’s policy remains steady, supporting a stronger SEK.
• Risk/commodities: Recent geopolitical tensions, including US military engagements, have escalated volatility for the US dollar and clouded its outlook.
• One macro factor: Sweden's GDP is projected to grow significantly in 2026, enhancing its economic stability compared to the US.
Range: The USD/SEK is likely to drift within its recent range as pressures mount, though extreme fluctuations could occur based on geopolitical events.
What could change it:
• Upside risk: A shift in geopolitical dynamics that improves investor confidence in the US could support the USD.
• Downside risk: Further increases in US jobless claims could exacerbate the dollar's negative trends, pushing the rate lower.
