USD/SEK Forecast: May 2020

Overall, I remain somewhat bullish but recognize that the month of May could very well be full of headaches for everybody involved as uncertainty will continue to be a mainstay of the markets.

While I do not do a lot of analysis on the Swedish krona, I do see an interesting set up in this chart that should be paid close attention to. Another thing that is worth keeping in mind is that the economy of Sweden has not been locked down like much of the rest of the world, so it will be interesting to see how the coronavirus or lack of for that matter may play out in this market. So far, it looks as if the Swedish krona is starting to pick up a bit of steam, but I also see significant support just below.

This makes sense, because the Swedish economy is typically thought of as a highly technologically driven economy, so traders will use it as a proxy for tech. It is more of a “risk on” trade one this market pulls back, as people get away from the US dollar. Nonetheless, I do think that it is only a matter of time before the market finds some type of reason to continue going higher, because quite frankly it is the overall trend.

Underneath, I see the 50 week EMA close to the 9.65 SEK level, which is sitting basically where that gap was from several weeks ago, although it should be pointed out that it was already filled. Nonetheless, there does tend to be a little bit of market memory attached to these places, so it is worth paying attention to. It is at that point that I would anticipate seeing some type of an attempt by the dollar to turn around and strengthen. Even though the Federal Reserve is willing to flood the market liquidity, the reality is that global markets are shut down in that is not going to be an environment that people will want to get overly “risk on” about. That being said, keeping your position size small and finally adding as the trade works out in your favor is the best way to go. If we managed to break down below the 9.65 SEK level, the next obvious support will be close to the 9.40 SEK level. I do not perceive this market breaking down through that level, at least not during the month of May. Overall, I remain somewhat bullish but recognize that the month of May could very well be full of headaches for everybody involved as uncertainty will continue to be a mainstay of the markets.

USD/SEK

Christopher Lewis

Christopher Lewis has been trading Forex for several years. He writes about Forex for many online publications, including his own site, aptly named The Trader Guy.