USD/SEK Outlook:
Bearish, as the rate is below its recent average and near recent lows, driven by several pressures.
Key drivers:
• Rate gap: The Federal Reserve's decision to hold interest rates steady contrasts with the ongoing accommodative stance of the Riksbank, which has reduced rates recently.
• Risk/commodities: With recent geopolitical tensions and a decline in U.S. investments, the USD has weakened, further impacting its attractiveness against the SEK.
• One macro factor: Expectations for Sweden’s GDP growth to increase, supported by fiscal stimulus and a recovering domestic demand, enhance the SEK's prospects against the USD.
Range:
The USD/SEK is likely to hold near recent lows within its 3-month range, lacking momentum for a significant rebound.
What could change it:
• Upside risk: A strong recovery in U.S. job market data could temporarily strengthen the USD.
• Downside risk: Increased geopolitical tensions could further diminish the USD's attractiveness and lead to more significant declines.
