- EUR/SEK reverses the recent decline and approached 10.20.
- Solid support emerges in the 10.10 region so far.
- The Riksbank kept the policy rate unchanged at 0.00%.
The Swedish krona is giving away part of recent gains and motivates EUR/SEK to bounce off recent lows and approach the 10.20 region on Thursday.
EUR/SEK appears supported near 10.10
EUR/SEK posts decent gains following two consecutive daily drops on Thursday, including another test of the solid support in the 10.10 area.
In fact, the cross moves higher after the Riksbank kept the repo rate unchanged at 0.00% at its meeting. However, the Scandinavian central bank increased its QE programme to SEK 700 billion (from SEK 500 billion) and is now expected to run until end of 2021.
The Riksbank justified its decision to extend and increase its asset purchases in the impact on the economy of rising spread of the coronavirus coupled with tighter restrictions.
In addition, the central bank revised lower its forecasts for GDP and inflation and it now sees the economy contracting 4.0% this year and expanding 2.6% and 5.0% in 2021 and 2022, respectively. Regarding inflation, the CPI is projected to rise 0.4% in 2020, 0.8% in 2021 and 1.2% in 2022.
The repo rate is seen unchanged at least until end-2023.
EUR/SEK levels to consider
At the moment, the pair is gaining 0.36% at 10.1586 and a move above 10.2333 (21-day SMA) would target 10.2928 (high Nov.13) en route to 10.3474 (55-day SMA). On the downside, the next support aligns at 10.1020 (2020 low Nov.10) seconded by 10.1249 (monthly low Dec.31 2018) and finally 10.0945 (monthly low Jun.15 2018).