EURSEK: Hits fresh 2024 high at 200-day SMA

• EURSEK hits highest level in 2024

• Riksbank signals future rate cuts

• Krona ↓ Vs. most G10 MTD

• Prices bullish on D1 but RSI overbought

• Moment of truth at 200-day SMA

The EURSEK hijacked our attention on Wednesday after hitting a fresh 2024 high above 11.50!

Bulls were already in a position of power with the minor currency pair blasting through key resistance earlier in the week.

With the Swedish Krona weakening further this morning after Sweden’s central bank indicated a potential rate cut as soon as May, further upside could be on the cards for the EURSEK.

Note: Riksbank left interest rates unchanged at 4% in March but struck a dovish note.

Traders are currently pricing in an 86% probability of a 25-basis point Riksbank cut by May 2024.

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When considering how this may be before the ECB and Fed which are expected to cut in June, it will make Riskbank the second major bank in the G10 space after Switzerland to cut rates.

Fun fact: The SEK has weakened against almost every single major currency this month.

Beyond the Riksbank decision, the latest economic sentiment data from Europe matched expectations, rising to 96.30 in March from 95.50 in the previous month. It will be wise to keep an eye on data from Germany published on Thursday which could influence expectations around when the ECB will start cutting rates.

Focusing on the technical picture, the EURSEK is faced with a “moment of truth” as it is confronted with a combined resistance of its 200-day simple moving average (SMA) and an upward-sloping resistance line at 11.50136.

From an Elliot Wave perspective, the 3rd impulse wave is in play and may rally to 11.68710 (over 17,000 points from its current 200-day SMA).

This is one highly probable scenario that EURSEK bulls, (those looking to see prices rally) may look forward to if the confluence of resistance is broken.

On the back of these news releases, EURSEK H1 broke out of the resistance zone of an upward-sloping channel which started to appear on Monday, March 25th, 2024, and is being rejected at the combined resistance earlier highlighted in D1 above.

EURSEK bears (those looking to see a price decline) may have their sights turned to the support zone of this channel at 11.44333 if the price continues to decline.

Bloomberg’s FX model points to a 78% chance that EURSEK will trade within the 11.3738 – 11.5829 range into next week.