Open an Account
☰
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 76% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Open an Account
✖

Riksbank set to tighten. But will it be by 75bps or 100bps?

November 22, 2022 11:00 AM

After raising rates by 100bps in September to bring the benchmark interest rate to 1.75%, Sweden’s Riksbank is widely expected to raise rates by at least 75bps when it meets on Thursday.  Sweden’s October inflation reading was 10.9% YoY vs a previous reading of 10.8% YoY.  Riksbank Governor Ingves recently said that Sweden’s rate needs to be higher than that of the ECB’s deposit rate to help strengthen the Swedish crown and prevent an import of inflation.  The ECB currently has deposit rates set at 2% and will meet on December 15th and February 2nd, 2023, before the Riksbank meets again later in February 2023.  If the Riskbank wants to stay ahead of the ECB in terms in higher interest rates, a rate hike by 100bps at the Thursday meeting is not out of the question, especially with inflation so high.  However, the housing sector may be weighing on the minds of the Riksbank Committee.  The housing market  is down roughly 14% from its recent peak to the current trough. As a result, the Committee may only wish to raise 75bps at this meeting.

EUR/SEK has been rising since making a low of 9.8751 on November 2nd, 2021.  The pair has been moving in an orderly channel since mid-August 2022 and recently made a near-term high of 11.0958 on October 21st.  EUR/SEK pulled back to the 50% retracement level from the lows of mid-August to the highs of October 21st , near 10.6826.  This was also the bottom trendline of the channel.  The pair bounced and is currently trading back in the middle of the channel, banging up against resistance from the lows of October 24th at 11.0052.

Source: Tradingview, Stone X

On a 240-minute chart, EUR/SEK is forming a flag formation at the previously mentioned resistance area. Expectations are that price will breakout in the same direction as the move before the flag, which in this case would be higher.  The target for a flag formation is the height of the flagpole added to the breakout point.  The current target for EUR/SEK is near 11.2927.  However, if the pair is to reach its target, it must first pass through the flag highs at 11.0212.  Once above there, the next resistance level is the highs from October 21st at 11.0958, then the top, upward sloping trendline of the channel near 11.2025.  Note that the pandemic highs from March 2020 cross at 11.4234.  However, if price fails to break above the flag formation, the first support at the flag lows at 10.9493.  Below there, horizontal support crosses at 10.9281 and 10.8455.

Source: Tradingview, Stone X

The Riksbank meets on Thursday and the decision to raise by 75bps or 100bps could have implications for the next direction in EUR/SEK.  If the Riskbank is less aggressive, the pair could break above the flag formation and be on its way to target at 11.2927. However, if the central bank is more aggressive, EUR/SEK may pull back.

 

The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex, commodity futures, or digital assets, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to FOREX.com or GAIN Capital refer to StoneX Group Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.

FOREX.com is a registered FCM and RFED with the CFTC and member of the National Futures Association (NFA # 0339826). Forex trading involves significant risk of loss and is not suitable for all investors. Full Disclosures and Risk Warning. Increased leverage increases risk.

GAIN Capital Group LLC (dba FOREX.com) 30 Independence Blvd, Suite 300 (3rd floor), Warren, NJ 07059, USA. GAIN Capital Group LLC is a wholly-owned subsidiary of StoneX Group Inc.

© FOREX.COM 2025