As we expected in December, a trend reversal took place, as a result of which the USD rose against the SEK by 3.34% within 40 days. The coronavirus also indirectly affected the crown due to investors' concerns about the prospects for reducing exports to China, since Europe is more dependent on exports to China than the United States. In addition, the region's economy, even without external factors, was in the stage of economic slowdown in 2019.
This week, the value of the crown was positively affected by the decision of the Central Bank of Sweden to leave the rate at 0%. At the same time, the regulator positively assessed the state of the Swedish economy, so it is unlikely to revise the rate downward in the near future. The US Federal Reserve is taking a similar position. Analysts predict that if the rate is reduced this year, it will be only once, in the second half of 2020. However, the latest labor market reports were disappointing in the US. As it became known this week, the number of open vacancies on the labor market fell sharply to the lowest level since 2008, and the unemployment rate rose by 0.1%. Such indicators may well force the Fed to reduce the rate more intensively. The deficit in the trade balance is also growing despite all the measures against the largest importer to the United States.
On the chart, we can see a decrease in the intensity of the trend over the past 2 weeks. At the same time, there is reason to believe that the peak has not yet been reached, and given the Stochastic oscillator's signal, the rates are in the oversold zone after the period of weakening of the dollar and strengthening of the crown. In the future, we expect the value of the dollar to recover to previously reached highs. Thus, the deals to BUY seem the most effective in the short and medium term, which is confirmed by most technical analysis tools.
