USD/SEK consolidates losses after hot PPI figures from the US, cautious FOMC minutes

• USD/SEK rose to a daily high of 10.9485 and settled near 10.9050.
• The pair lost nearly 1% on Tuesday, driven by dovish remarks from Fed officials.
• FOMC minutes from September didn’t reveal any surprises; the bank will still proceed “carefully”.
• Focus set on the US and Sweden’s September CPI figures to be released this week.

In Tuesday’s session, the USD/SEK rose to a high of 10.9485 and then consolidated near 10.9050 as bullish momentum seemed limited. The Greenback recovered some ground after hot Producer Price Index (PPI) figures from September and after the Federal Open Market Committee (FOMC) minutes revealed that members are not ruling out another hike in this cycle. Sweden and the US will release their respective Consumer Price Index figures from September later this week.

Inflation figures from both countries will be crucial for the Federal Reserve (Fed) and the Swedish Riksbank's next decisions. Earlier in the session, the US reported that the Producer Price Index (PPI) from September from the US came in higher than expected at 2.2% vs the 1.6% forecasted by markets and accelerating from 1.6%.

In line with that, Jerome Powell from the Fed left the door open for another hike, stating that the monetary policy decisions will still depend on incoming data. In addition, the FOMC minutes revealed that members are considering the lags of financial tightening and the recent data volatility, confirming that the upcoming decisions will be decided “carefully”. On the other hand, the Riksbank’s September minutes warned that rates might need to be raised further beyond 4%. For the US side, inflation figures will be published on Thursday with the headline and core Consumer Price Index (CPI) figures are expected to decline to 3.6% and 4.1% YoY, while the Swedish headline numbers remain steady at 7.5% YoY due on Friday.

USD/SEK Levels to watch 

Upon analysing the daily chart, a neutral to bearish trend becomes evident for USD/SEK, with the bears holding momentum but seeming to be taking a hiatus. The Relative Strength Index (RSI) has a positive slope below its midline, while the Moving Average Convergence (MACD) presents neutral red bars. Moreover, the pair is below the 20-day Simple Moving Average (SMA) but above the 100 and 200-day SMAs, highlighting the continued dominance of bulls in the broader perspective but warning that the bears are gaining traction.

Support levels: 10.8580, 10.8083 (100-day SMA), 10.7750.
Resistance levels: 10.9250, 10.9610, 11.040 (20-day SMA).