- EUR/SEK reverses Monday’s pullback and tests 10.15.
- The Riksbank left the policy rate unchanged at 0.00%.
- Swedish jobless rate ticked higher to 10.0% in March.
The Swedish krona trades on the defensive and pushes EUR/SEK to fresh daily highs in the 10.15 region on turnaround Tuesday.
EUR/SEK extends the choppy performance above the 10.10 region following the Riksbank decision to leave the key policy rate unchanged at 0.00%, matching the broad consensus.
The Scandinavian central bank noted that the economic activity improved since the latest assessment in February, although inflationary pressures remain low. That said, the Riksbank still sees the need for the monetary conditions to remain very accommodative to achieve the inflation target and keep supporting the economy.
The Riksbank also suggested that the economy could reach more normal levels closer to the end of the year, while Governor Ingves talked down concerns in case inflation overshoots the 2% target for some time.
Earlier in the Swedish docket, the Unemployment rate ticked higher to 10.0% during March, the trade surplus shrunk to SEK 4.10 billion during the same period and Producer Prices rose 1.1% inter-month and 3.8% from a year earlier.
The monthly rally in the krona appears to have met some tough resistance in the 10.1000 area so far. Growth prospects in Sweden and abroad have improved and helped the krona in past weeks, although pandemic concerns in the country persist and emerge as a firm headwind for the time being. Another source of concern for the Riksbank materializes in the housing market, particularly house price inflation. Despite the central bank “kicked” this issue to the regulatory field, it remains a theme not to be underestimated in the medium-term.
At the moment, the pair is gaining 0.11% at 10.1387 and a move above 10.1754 (weekly high Apr.21) would target 10.2328 (200-day SMA) en route to 10.2973 (2021 high Apr.5). On the downside, the next support emerges at 10.0815 (monthly low Apr.19) seconded by 10.0070 (2021 low Feb.22) and finally 10.0000 (psychological level).
