USD/SEK Outlook: The outlook is slightly weaker, but likely to move sideways since the rate is below its recent average and near recent lows without a clear driver.
Key drivers:
• Rate gap: The Federal Reserve's expected rate cuts create a more dovish (cautious) stance compared to the Riksbank’s steady rate, which is likely to support SEK's strength.
• Risk/commodities: Ongoing concerns about U.S. tariffs could undermine the USD, reflecting a negative risk appetite towards American assets.
• One macro factor: Sweden's stable economic growth outlook, bolstered by fiscal measures, adds to the positive environment for the SEK.
Range: The USD/SEK rate may hold within its recent range as pressures from U.S. economic policies balance SEK’s positive indicators.
What could change it:
• Upside risk: A surprising improvement in U.S. labor market data could boost the USD.
• Downside risk: Further developments in tariff negotiations could increase volatility in the USD, pushing it lower.
