EUR/SEK spiked up on Thursday, after the Riksbank kept interest rates on hold and noted that it could delay raising them. Previously, the Bank has been advocating for slow repo-rate increases to start towards the end of the year, while today, it noted that rates will be held unchanged in October, and then raised either in December or February. From a technical standpoint, the rebound in EUR/SEK came from near the uptrend line drawn from the low of the 30th of July, which keeps the near-term outlook positive.
After the rally, the rate hit resistance slightly above the 10.6000 barrier and then it retreated somewhat. That said, we would expect the bulls to take charge again soon and perhaps make another attempt to push the pair above that zone. Such a break could pave the way towards the 10.6730 hurdle, marked by the inside swing low of the 29th of August, the break of which could trigger extensions towards the peak of that day, at around 10.7280.
The catalyst for more upside in this pair could be the outcome of the Swedish elections on Sunday. Polls suggest that the significant increase in support for the nationalists Sweden Democrats, who oppose immigration and Sweden’s EU membership, could make it hard for the center-left or center-right blocs to form a majority government.
Taking a look at our short-term oscillators, we see that the RSI rebounded from near its 30 line and just poked its nose above 50, while the MACD, although negative, has bottomed and crossed above its trigger line. These indicators support the case for the pair to trade north for a while more.
On the downside, we would like to see a clear dip below 10.5200 before we start assessing the likelihood of a trend reversal. Something like that could confirm the break of the aforementioned uptrend line and signal a forthcoming lower low. The bears may initially aim for our next support of 10.4850, the break of which could set the stage for the 10.4450 territory.
