Forex Market: EUR/SEK daily trading forecast

Yesterday’s trade saw EUR/SEK within the range of 9.1916-9.2257. The pair closed at 9.2127, losing 0.01% on a daily basis.

At 6:53 GMT today EUR/SEK was up 0.02% for the day to trade at 9.2119. The pair broke the first key weekly resistance and touched a daily high at 9.2196 at 6:35 GMT.

Fundamental view

Euro zone

At 11:45 GMT the European Central Bank (ECB) is to announce its decision in regard to borrowing costs. The median estimate by experts suggests that the central bank will probably maintain its benchmark interest rate at the record low level of 0.15% at the policy meeting today. The ECB cut borrowing costs by 0.10% at its June 5th policy meeting. Short-term interest rates are of utmost importance for the valuation of national currencies. In case the central bank is dovish about inflationary pressure in Euro zones economy and thus, either puts interest rates on hold, or reduces them, this will usually have a bearish effect on the common currency.

ECBs Governing Council aims to keep prices in the region stable, while stability is defined as a year-on-year increase in the Harmonized Index of Consumer Prices (HICP) for the Euro zone of below 2%.

The interest rate decision is to be followed by the press conference with ECB President Mario Draghi, at which he takes a statement on monetary policy. During this event volatility of euro crosses is usually high. In case Draghi offers a more hawkish tone, the euro will usually receive support, while a more dovish tone will have a bearish effect on the currency. The press conference is scheduled at 12:30 GMT.

In his speech at the Economic Symposium in Jackson Hole Mario Draghi expressed concerns over high unemployment rate in the single currency area. ”The only conclusion we can safely draw, in my view, is that we need action on both sides of the economy: aggregate demand policies have to be accompanied by national structural policies. On the demand side, monetary policy can and should play a central role, which currently means an accommodative monetary policy for an extended period of time. I am confident that the package of measures we announced in June will indeed provide the intended boost to demand, and we stand ready to adjust our policy stance further. We will launch our first Targeted Long-Term Refinancing Operation in September, which has so far garnered significant interest from banks”, Draghi said in Wyoming.

Sweden

At 7:30 GMT Sveriges Riksbank is expected to announce its decision regarding borrowing costs. The median forecast by experts points that the central bank will probably leave its repo rate without change at the record low level of 0.25% at the policy meeting today. The benchmark rate was cut by 0.50% at bank’s meeting on July 3rd, with the main reason being lower than expected rate of inflation, despite strengthening economic activity. ”There has been a broad fall in inflation and it is now assessed that underlying inflationary pressures are clearly lower than assessed in April. The repo rate and the repo-rate path therefore need to be even lower for inflation to rise towards the target. A further factor taken into account is that the forecasts for international policy rates have been revised downwards”, as pointed out in the statement by the Executive Board of Sveriges Riksbank.

According to the statement, a slow increase in the repo rate may be initiated at the end of 2015.

The repo rate represents the rate at which banks can borrow or deposit funds at the Riksbank for a period of seven days. Short-term interest rates are of utmost importance for the valuation of national currencies. In case the central bank left intact or even cut the benchmark rate, this would have a bearish effect on the krone.

Technical view

According to Binary Tribune’s daily analysis, the central pivot point for the pair is at 9.2100. In case EUR/SEK manages to breach the first resistance level at 9.2284, it will probably continue up to test 9.2441. In case the second key resistance is broken, the pair will probably attempt to advance to 9.2625.

If EUR/SEK manages to breach the first key support at 9.1943, it will probably continue to slide and test 9.1759. With this second key support broken, the movement to the downside will probably continue to 9.1602.

The mid-Pivot levels for today are as follows: M1 – 9.1681, M2 – 9.1851, M3 – 9.2022, M4 – 9.2192, M5 – 9.2363, M6 – 9.2533.

In weekly terms, the central pivot point is at 9.1685. The three key resistance levels are as follows: R1 – 9.2185, R2 – 9.2558, R3 – 9.3058. The three key support levels are: S1 – 9.1312, S2 – 9.0812, S3 – 9.0439.