USDSEK has continued its October slump this week as well after the pair created the new 17-year high of $9.9645. The pair is now trading well below the previous swing high, which hasn’t been able to act as a decent support.
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USDSEK is now risking bigger retreat lower as traders anticipate the Riskbank meeting on Thursday. ING analysts believe that Riskbank won’t change its approach significantly.
“Policymakers are still likely to pencil in a rate hike over the next six months, albeit the timing will likely be pushed back from the turn of the year and further into 1Q/2Q20.”
“This suggests there’s limited downside to SEK, particularly when the global environment shows some tentative signs of improvement (the decreasing probability of a ‘no deal’ Brexit and the falling odds of an imminent escalation in the US-China trade war).”
The most recent retreat lower also means that the bulls failed to keep the price action above the 127.2% Fibonacci extension at $9.8915. Hence, USDSEK created a failed breakout, which may result in more losses for the pair. On the downside, bears are expected to consolidate around the previous 14-year high of $9.4481.