Marshall Gittler
Trading Analysis
USD/SEK
The absence of any major news or events during the European morning Monday, translated into a relatively narrow range in most currencies. The dollar was higher against JPY, GBP, AUD, SEK and NOK, in that order, while it was lower against NZD, CHF and EUR. The greenback was stable vs CAD.
USD/SEK had a very intense intraday movement as it rose 300 pips before the country’s retail sales were released, dropped 300 pips after the figure was out and bounced back up in the following minutes. The initial advance came after a report revealed talks between Swedish Government with Alliance opposition that may allow the country to avoid snap election. The government is expected to announce new elections in March next year, despite being only two months in office, after its budget proposal was rejected earlier this month. The decision will not be officially announced until Dec. 29, as the Swedish Constitution states that a government has to have been in power for at least 3 months before it can call for another election. Later in the day the country’s retail sales rose 0.5% mom in November, at a slower pace from October but better than the forecasts. USD/SEK dipped 0.4% but recovered immediately and advanced even more in the following minutes. I expect the weakening fundamentals and the risk in politics to weigh on SEK, leaving it vulnerable in the following months.
USD/SEK firmed up during the European morning Monday but the move was halted by the 7.7530 (R1) resistance level. A break above that hurdle could push the rate to even higher levels perhaps towards our next resistance line of 7.7940 (R2). Our short-term oscillators support a small halt in the advance as the RSI lies just below its overbought territory and moves along its 70 line, while the MACD, already positive remains above its trigger line. These momentum signals support my view that a break above the 7.7530 (R1) level is necessary for another leg up. In the bigger picture, the rate is trading above the black uptrend line drawn from the low of the 14th of October and above the light blue line taken from the low of 19th March. This confirms that the overall outlook of the pair is to the upside.
Support: 7.6500 (S1), 7.6010 (S2), 7.5300 (S3) .
Resistance: 7.7530 (R1), 7.7940 (R2), 7.8370 (R3).
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