Source: ForexYard
Norway appears to be an active market player for the forex world lately. With a recent discovery of a sizeable oil well in the northern Norwegian Sea, the price of the black gold remains a serious factor for the NOK. As the USD gains strength from recent risk aversion, the price of Crude Oil has entered a slump which has weighed heavily on Norway’s economy, but the discovery will no doubt help future development and growth for their market share.
Also adversely affecting the NOK’s value is the recent decrease in Norway’s interest rates to 1.25%, a move which was expected by most market analysts, but carries the expectant impact of weakening the currency that was needed to help boost exports.
In Sweden, the Riksbank announced on June 10th that it will borrow up to 3 billion EUR to shore up its financial backing. This comes as no surprise since many banks are still under threat of losing substantial capital from the prospect of Latvia devaluing its currency, the Lat, due to the recent crisis in the Baltic States.
Since many of Sweden’s banks receive the bulk of their funding in foreign currencies, the banks will need to sufficiently back up their foreign reserves. This EUR-borrowing operation is intended to assist in this backing, but works as a way of devaluing the SEK, which many forex traders can now see quite clearly.
USD/SEK 1-Hour Chart
• The above chart is the USD/SEK hourly chart by ForexYard.
• The indicators used are the Bollinger Bands, RSI, and MACD.
• Point 1: The price has just entered the over-bought territory on the RSI, signaling a downward movement may be in the making.
• Point 2: The MACD shows multiple bearish crosses which support the notion of a downward movement.
• Point 3: The Bollinger Bands on the chart appear to be tightening as foreshadowing of an impending sharp, volatile movement.
• Conclusion: This pair is either going to experience a downward movement before a volatile jump (direction is unclear for the jump), or the jump is going to be downward if the value of the USD takes a hit today. Either way, a downward movement is imminent; the size of that move is what is undetermined at this point.
Forex Market Analysis provided by ForexYard.
© 2006 by FxYard Ltd
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