US dollar continues to grind higher against Swedish krona

Kate Leaman Kate Leaman

27 August 2019

SEK coins and SV flag

  • Dips but then recovers during Tuesday session
  • Keeps finding buyers just below at the 9.60 SEK level
  • US dollar continues to press historic high
  • Moving averages continue to tilt higher

The US dollar continues to find resiliency against the Swedish krona, after initially pulling back on Tuesday. By doing so, we ended up forming a bit of a hammer, and the hammer does suggest that there are plenty of buyers underneath willing to take advantage of the uptrend. We are approaching all-time highs, as we continue to see a lot of buying pressure near the 9.60 SEK level. This is a marketplace that continues to favor the US dollar which makes quite a bit of sense considering the geopolitical concerns out there.

Technical analysis

usd/sek chart

USD/SEK

The technical analysis in the USD/SEK pair continues to look very bullish, as we found buyers underneath every time it pulled back. The market looks as if it is trying to break out to the upside, as the 9.70 SEK level is the epicenter of the massive fight that we have seen. The 50 day EMA has offered support underneath, so it looks as if we are ready to continue to go higher as well. The 10 SEK level is probably the next target given enough time, but it’s obvious that we have a lot of back and forth to deal with in the short term.

You can see that we pulled back to the 61.8% Fibonacci retracement level and have bounced quite significantly to reach the 0% Fibonacci retracement level. Now we are much likelier to go higher as every time we dip we continue to find plenty of buyers.

Risk on/risk off

The risk appetite around the world should continue to soften as we continue to have a lot of concerns when it comes to the global growth story, and of course the geopolitical concerns. The trade war continues to push things around, and it’s not just the US/China situation. We also have South Korea/Japan going at it, and the Brexit of course continues to be a major issue. All things being equal it’s likely that this market should continue to rise as traders continue to flood towards the treasury markets in the United States. This is considered to be the “safety trade”, and of course that means that the US dollar will continue to be picked up.

Keep in mind that the Swedish krona is known as a “risk on” currency, not only because it’s a smaller economy, but the fact that Sweden has a lot of technology in its stock market. That being said, it will rise as tensions rise, and they seem to be going nowhere anytime soon. I like the idea of buying short-term pullbacks and aiming for the 10 SEK level longer-term. I would also expect a lot of resistance above at that area as it is a large, round, psychologically significant figure that will of course attract a lot of attention.


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