By Greg Holden – The Swedish krona has undergone one of its strongest rallies in recent memory these past few days after the Riksbank Deputy Governor Barbro Wickman-Parak delivered a hawkish statement last Thursday. The SEK climbed to a 2-year high against the US dollar following Wickman-Parak’s fiery call for interest rate increases in the near future.
The USD/SEK fell to 6.5129 last week, but has rallied to as high as 6.8017 at the close of New York trading yesterday. Wickman-Parak’s speech highlighted the growing need for Sweden to boost rates before it’s too late, but also put the spotlight on the potential reasons behind the decision to hold rates where they are. This has put some downward pressure on the SEK alongside a rising USD.
In a similar turn of events, the Norwegian krone (NOK) appears to be falling out of favor with foreign investors specifically because Norges Bank is perceived to be stalling on interest rate hikes as well. The USD/NOK has come off a 6-day high; the pair is climbing towards 5.9425 from as low as 5.7000 seen just two days ago.
Technical Analysis
If we look at the USD/SEK daily chart we can see some relatively clear indications of what’s happening on a technical level. The pair has been trading in a downward trend for some time now, but has only recently pared some of its losses to reach back up towards its predominant, overhead trendline.
We can see the price reaching back and just recently touching the 23.6% Fibonacci line. The price could meet some mild resistance there and turn downwards, but the RSI and Stochastic (slow) seem to suggest otherwise; as does the overhead trendline. It appears there could be more bullish room for this pair to run. If the price breaches above 6.8500, then traders may want to anticipate an upward breach which could climb as high as 6.9750 if the Riksbank doesn’t step in on the fundamental side.
Forex Market Analysis provided by ForexYard.
© 2006 by FxYard Ltd
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