Barclays Trade of the Week: Long USD/SEK

We expect the Riksbank to ease policy further this week and commence with its own quantitative easing program. As a result, we expect downward pressure on Swedish rates and consequently on the SEK. Technically, the recent consolidative activity is seen as a healthy pause within the context of the multi-month rising trend. We look for support in the 8.1475 area to underpin further USD gains. A move above 8.3900, the recent range high, would confirm upside traction. Our targets are toward 8.6125 and then the April 2009 reaction high near 8.7385.

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