The recent dynamics of the USD to SEK exchange rate have been shaped by a combination of softer inflation data in the US and the Riksbank's monetary policy adjustments in Sweden. Analysts noted that a decline in the US consumer price index from 3% to 2.7% has sparked a notable selling bias for the US dollar. Expectations for aggressive rate cuts by the Federal Reserve in 2026 are fueling downward pressure on the USD as traders position for a dovish policy shift. The USD has recently traded at 90-day lows near 9.1646, approximately 2.7% below its three-month average, indicating a significant weakening trend.
The market sentiment surrounding the Federal Reserve suggests that if economic data continues to show slowing growth, this could prompt faster rate cuts, leading to a weaker dollar. Despite the resilience of the labor market, mixed economic signals, including a contraction in consumer spending, suggest that the USD may remain under pressure. Overall, the outlook is one of cautiousness regarding further rises in USD as investor focus shifts to potential easing measures from the Fed.
In contrast, the Swedish krona's recent developments reflect proactive monetary policy from the Riksbank, which has cut rates to support economic activity while targeting inflation stability. The central bank’s decision to lower the policy rate to 1.75% indicates efforts to stimulate growth amidst subdued economic conditions. The IMF's forecasts for Sweden's GDP growth, expected to be 1.9% in 2025 and 2.2% in 2026, further bolster confidence in the SEK, despite the challenges posed by external economic pressures.
Overall, the interplay between the ECB, Riksbank, and shifting Fed policies will dictate the near-term movements in the USD/SEK exchange rate. The currency pair is expected to remain in a stable range unless significant economic shifts occur, and market participants will be closely monitoring upcoming inflation data and central bank communications for indications of future trends.
