The rates continue within an upward trend in favor of the USD, reaching the highest level for the last 17 years. However, we can't see any signs of a trend reversal and can count on the pair reaching new highs. The reason is the economic downturn in the EU and the perspectives for a further easing of the ECB's monetary policy. This has had a negative impact on the currencies in the region, including the SEK, given that the Swedish economy exports a significant part of its products to other EU countries.
This week the situation has not changed. Macroeconomic reports show a weakening in the EU economies: inflation in Germany remains weak, business sentiment worsens, and GDP growth in the EU amounted to only 0.2% in the second quarter of 2019.
Macroeconomic reports on the US economy were stronger and show the acceleration of inflation in the US. However, the main factor for the strengthening of the USD was yesterday's news about the decision to postpone the introduction of new duties on imports from China until the end of the year, which was a complete surprise for investors and caused a panic wave of purchases of risky assets. This presents another delay without real perspectives for the end of the trade conflict, which has a negative impact on the world economy.
Nevertheless, we believe that in the medium term the SEK will be weakened more by external negative factors. Therefore, the deals on the trend will be the most optimal. Most technical analysis tools, including the Stochastic oscillator, also point to the deals to BUY.
