Scandinavian Currencies Continue to Benefit from Falling USD

Name: Greg Holden

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The biggest trend in the market now is the falling US Dollar. The Scandinavian currencies have all continued their bullish run against the greenback, along with many other global currencies. The Swedish central bank has been heralded as a champion of the recent financial crisis and as a model to emulate when struggling with a troubled region such as the Baltic States. Norway’s currency has been compared to the value of the AUD in its recent bullish run due to the fact that it has risen against the Dollar more than many other currencies.

Norway’s close link to commodity prices means that the recent spikes in Gold, Silver, and Crude Oil have helped to dramatically rise the value of the NOK. Most investors, however, continue to pay special attention to the SEK due to its sustained bullishness despite multiple setbacks and bank stress tests which many thought would push Sweden into severe financial risk. If Sweden can continue to out-perform its market expectations, traders will no doubt see a steady rise in the Swedish Krona over the coming weeks.

- The chart below is the 4-hour USD/SEK chart by ForexYard.

- The indicators used are the Relative Strength Index (RSI), the Stochastic (slow), and the MACD/OsMA.

- Point 1: This pair is currently in a mild-sloping bearish channel.

- Point 2: There is a fresh bullish cross on the Slow Stochastic which suggests that a bullish movement is building.

- Point 3: There is also a bullish cross on the MACD, but this cross is very near the 0 line which means the upward pressure is weak.

- Point 4: The RSI has not yet reached the over-sold territory, and is currently still pointing down, indicating that there may be some downward momentum remaining before the price swings back towards the upper border of the bearish channel.

- Forex traders may anticipate some minor bearish movements, but indications are pointing to an upward correction soon. A price near 6.900 is reasonable for short-term bearish positions. But it will likely bounce off this price and return to above the 6.9500 level in the medium-term; 7.000 is also a solid long-term target for this pair.

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