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Looking to buy or go short in USD/SEK? Read this

February 2, 2021 12:27
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sek, USD/SEK,

Today, Short Selling will discuss the latest important news connected with the US dollar and Swedish krona. The USD/SEK pair is weakening last several months, and the US policymakers indicated unprecedented uncertainty levels over the economic future. Coronavirus concerns continue to weigh on the US economy; vaccine distribution is delayed globally, fueling the dismal mood.

Shortfalls are directly linked to a delay in a possible economic comeback. The market continues to dump the US dollar as the US is getting more difficult with a rise in unemployment, and the Fed would probably not hike interest rates in the upcoming years. The Federal Reserve left interest rates unchanged at its latest monetary meeting and reported that the “path of the economy would depend significantly on the course of the virus. Macroeconomic figures show shy economic progress, but despite this, investors believe that growth will return in the second half of the year. One of our favourite sites for trading USD/SEK is Capital, with low spread, zero commission, a user friendly website and a huge amount of instruments. Try Capital now!

Rating: 9.57/10
Minimum deposit: €250 by bank
Description: Zero commission, a user friendly website and a huge amount of instruments. Try Capital now!
Risk warning: 67.7% of retail investor accounts lose money when trading CFDs with Capital.

Risk off mode?

A generally dovish statement maintained markets in risk-off mode, and investors' focus will shift to US employment data. The US will publish next Friday the Nonfarm Payrolls report, and according to estimates, the country could add 85K new jobs in January after losing 145K positions in December. On the other side, Sweden's currency gained ground against all its major rivals last year, and a massive outperformance of the Swedish krona (SEK) continues. Sweden's Riksbank held firm in 2020 compared to many other major central banks, and this is one of the major reasons behind the rise of the Swedish krona. It is also important to say that Sweden had a unique approach to the covid pandemic fight, which helped the country to avoid the worst of the labor market disruption seen in other developed economies.

Technical analysis

The USD/SEK  is losing its value, this currency pair is still trading below the 9.00 resistance level, and the risk of further declines is not over yet. With the trend still clearly pointing to the downside for USD/SEK, there's a high probability that the krone's strength and USD weakness will extend into the first quarter of 2021. One of the easiest ways to buy or short USD/SEK is through a margin trading platform. Many brokers allow this type of trading, with margin trades allowing investors to “borrow” money from a broker to make a trade. It's important to remember that there may be a leverage factor, which could either increase your profits or your losses. It's not a good idea to hold a short position for long periods or to leave an open position with no stop-loss order.

The global political tensions also have a big influence on this pair, and the pair needs to fall below the 8.00 level to extend moves lower. I marked support and resistance levels – 8.60, 8.80, and 9.00 represents the current resistance level, 8.20 and 8.00 are the current support levels on this chart. If the price jumps above 8.60, it would probably reach the 8.80 level very soon; the next target could be located around 9.00. If the price falls below 8.00, that could be a very good opportunity for the short- term traders; short-term traders can put the stop loss at 8.15 and take profit at 7.60 or below.

Latest trading range for USD/SEK

The USD/SEK has advanced above 8.40 last trading week, but the risk of further declines is not over yet, and the major trend is still bearish (downtrend). Vaccines distribution is delayed globally, and the US policymakers indicated unprecedented levels of uncertainty over the economic future. The Federal Reserve left interest rates unchanged at its latest monetary meeting and reported that the “path of the economy would depend significantly on the course of the virus. The major reason behind the rise of the Swedish krona is that Sweden's Riksbank held interest rates steady throughout the last year, making only incremental changes to its bank lending rate to stimulate the economy.

A unique approach to Covid-19

It is also important to say that Sweden had a unique approach to the covid pandemic fight, and there's a high probability that the krone's strength and USD weakness will continue. The risk factor for the Swedish krona is the fact that Per Jansson, a member of the Riksbank, has discussed the negative interest rates. He is opening up for negative interest rates again if in case he manages to get more on his side, the krona might decrease in value drastically against the US dollar.

Rating: 9.57/10
Minimum deposit: €250 by bank
Description: The best site to trade USD/SEK, with low spread and zero commission. Explore Capital today!
Risk warning: 67.7% of retail investor accounts lose money when trading CFDs with Capital.