USD/SEK approaches multi-month highs amid solid US economic figures

• USD/SEK jumped to a high around 11.212 and then settled at around 11.180, seeing 0.35% gains.
• Despite strong GDP data, US Treasury yields and hawkish bets on the Fed are declining.
• All eyes are now on PCE data from September from the US on Friday.

On Thursday, the USD/SEK gained further ground, tallying a five-day winning streak and jumping to its highest level since September 22 at 11.212. Strong data reported from the US is the main responsible for the Greenback outperforming its rivals but as US yields retreat, the upside is limited.

The U.S. Bureau of Economic Analysis reported that the Gross Domestic Product (GDP) Growth Rate preliminary estimate from Q3 came in above the consensus. It showed that the economy grew at an annualised rate of 4.9% QoQ vs the expected 4.2% and rose from its previous figure of 2.1%. On the negative side, the U.S. Department of Labor revealed that the Initial Jobless Claims from the week ending on October 21 exceeded expectations. The headline figure came in at 210,000, above the consensus of 208,000, and rose from its previous figure of 200,000.

Despite the strong GDP figures, investors focus on Jobless Claims accelerating as US Treasury yields fall. The 2,5, and 10-year yields fell towards 5.04%,4.80% and 4.84%, respectively, limiting the USD’s gains during the sessions. Another factor that could limit the pair's upward trajectory is investors betting on higher of the Federal Reserve (Fed) not hiking again in 2023. The CME FedWatch Tool suggests that the odds of a 25 basis points hike in December fell to 20% and that a pause in November is nearly priced in. 

However, Personal Consumption Expenditures (PCE) from September are due on Friday, which could impact the pair’s dynamics as that metric is the Fed’s preferred inflation gauge.

USD/SEK Levels to watch 

 The daily chart analysis indicates a bullish outlook for the USD/SEK in the short term. The Relative Strength Index (RSI) is above its midline in positive territory,  aligning with the positive signal from the Moving Average Convergence Divergence (MACD), which displays green bars, reinforcing the strong bullish sentiment. Also, the pair is above the 20,100,200-day Simple Moving Average (SMA), indicating a favourable position for the bulls in the bigger picture.

 Support levels: 11.145, 11.087, 11.055.
 Resistance levels: 11.200, 11.242, 11.265

USD/SEK Daily Chart