The Swedish krona declined by more than 40 basis points after the country’s statistics office released the March unemployment rate numbers. As a result, the USDSEK pair continued the upward trend that started yesterday.
The number of coronavirus cases have been rising in Sweden. According to data compiled by Worldometer, the country has confirmed more than 11k cases and more than 1,000 deaths. Unlike in other countries, the number of infections and deaths is on an upward trajectory. Moreover, the numbers are higher than those of other Nordic countries.
Experts blame this on the lax policies put in place by the country’s government. The leaders have not called for a nationwide curb on movements and many businesses and schools are open. Still, the economy has been affected because most people are opting to stay at home.
The data released today by Statistics Sweden confirm this. The unemployment rate rose to 7.8 per cent in March. This was the worst number since 2017 and is significantly higher than February’s 6.9 per cent. As a result, millions of people have rushed to apply for unemployment benefits. And, there are signs that the country’s economy could shrink by 4 per cent this year.
The surging number of deaths and infections means that the government may initiate strict measures to curb the disease.
We will receive the country’s inflation numbers later today.
The four-hour chart shows that the USDSEK pair has been on a downward trend since March. The price found significant support and failed to move below the 50% Fibonacci Retracement level. The Fibonacci was drawn by connecting the highest and lowest levels in March.
Subsequently, the pair has been forming a descending triangle as shown in blue below. I expect the pair to be bullish if it moves above the current price of 10.00, which is also along the diagonal line of the triangle pattern.
On the flipside, the pair could also attempt to retest the previous support of 9.8500. If it does this, it will likely continue moving lower.