The downward trend in favor of the Swedish Krona continues. In two months the dollar lost 5% against the SEK, which was facilitated by many factors. However, some of them put equal pressure on both currencies. In November, the results of the US election led to a weakening of the dollar, as hopes for new incentives for the US economy stimulated a sell-off in the USD. The lowest level in two and a half years was tested a week ago, but not updated.
This week the rates began to recover as investors drew attention to the sharp increase in the incidence of coronavirus in Europe and the United States, as well as the introduction of new restrictions in the EU, including Sweden itself. This certainly threatens the region's economy, and according to the latest report published this week, industrial production output in Sweden has declined for the sixth month in a row. In the EU, industrial production is also declining more than expected. Therefore, we can assume that the region will remain in a recession in the near future.
Despite the fact that Joe Biden will be the President of the United States, and therefore, investors expect a normalization of relations with trading partners, the results from the election are not completely finalized. This keeps the market uncertain, and the development of the pandemic adds volatility to all quotes. The USD may be under pressure from both the election results and the pandemic. However, it has a good chance of a recovery against the SEK. In this situation, we open the deals to Buy considering the beginning of the price correction, although a trend reversal by the end of the year is not excluded. Most technical analysis tools also lean toward the deals against the trend.
