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    IronFX Intraday Comment | USD/SEK | 12/11/2015

    • The dollar traded mixed against its G10 peers during the European morning Thursday. It was higher against NOK, EUR, GBP, CHF and CAD, in that order, while it was slightly lower vs SEK. The greenback was virtually unchanged against JPY, NZD, and AUD.

    •Sweden’s consumer prices rose for the second month in a row, supporting Riksbank’s view that economic activity is strengthening and inflation is showing a clear upward trend. The temporary escape from deflation quelled some concerns that the Bank might have to ease further to ensure that inflation continues to rise towards the target. However, bearing in mind that the Riksbank is still very concerned regarding the strength of the global economy, we believe that the possibility for further easing is still alive. As a result, we maintain our SEK-bearish view.

    •ECB’s President Draghi reaffirmed the Bank’s readiness and willingness to use all tools available within its mandate to boost the prices in the region. Among others, he said that incoming data confirm that the bloc’s recovery is progressing moderately and that downside economic risks are clearly visible. EUR/USD came under renewed selling pressure following these remarks. The pair breached briefly the 1.0700 support area, but bounced back up to trade few pips above it. A break below that level is needed for the bears to push the rate towards our next support at 1.0675.

    • USD/SEK has been trading in a pennant formation since the 6th of November. This keeps the short-term bias flat for now. However, the prevailing short-term trend is positive and this increases the possibilities for the rate to exit the formation to the upside. A break above the resistance barrier of 8.7200 (R1) is likely to confirm the case and could initially target the next one at 8.7600 (R2), defined by the peak of the 6th of November. Our momentum studies are headed lower, confirming the lack of the positive momentum and my choice to stand aside at the moment. As for the bigger picture, USD/SEK has been trading in a wide range between 8.1000 and 8.8300 since mid-January. Following the rebound from the lower bound of the range on the 15th of October, I would expect the pair to continue higher towards the upper end of the range. This is another reason I believe that the rate is likely to exit the pennant to the upside.

    • Support: 8.6500 (S1), 8.6000 (S2), 8.5700 (S3)

    Resistance: 8.7200 (R1), 8.7600 (R2), 8.8000 (R3)

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