Broad-Based US Dollar Weakness Drives USDSEK to 2-Month Low

A broad-based weakening of the US Dollar against a basket of currencies is sending the exotic pairs lower, and the USDSEK is not left out. A decline of the US Dollar Index on dismal homebuilding data has allowed the Swedish Krona push to 2-month highs against the US Dollar. The coronavirus pandemic is said to be responsible for the drop in new residential construction.
Data from the Census Bureau shows that the monthly new residential construction data, made up of the new building permits and housing starts fell by 20.8% and 30.2% respectively in April 2020 when compared with the figures obtained in March 2020. New permits came in at 1.074K versus the March 2020 figure of 1.356K, while privately-owned housing starts hit a seasonally adjusted annual rate of 891K, versus the March 2020 estimate of 1.276K. Both data were also less than the 1.330K and 1.267K recorded for each respective data metric in April 2019.
The USDSEK is presently trading at 0.68% lower on the day at 9.60590, pushing towards previous lows last seen on March 16 at 9.58325.

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Technical Outlook for USDSEK

The downside move of the USDSEK is an extension of the breakdown of the bearish flag. The price breakdown move from the symmetrical triangle formed this flag, along with the consolidation which followed after that. The USDSEK is pushing towards the 1 November 2019 and 5 February 2020 lows at 9.54471, which is expected to provide immediate support following the downside break of the 200-period moving average.

Below this level, further support exists at 9.44692 and 9.38120. However, these targets would require increased downward pressure to take the USDSEK beyond the price projection from the bearish flag that terminates at 9.54471. 

On the flip side, a bounce at the 9.54471 price level allows the pair to retest 9.68797, with further advance extending the upside pullback towards the 9.75500 price level where the lower border of the flag is located.

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