Forex Analysis Report 6-3-20...Goldman Sachs Said To Short The USD/SEK
EUR/SEK is the abbreviation for the Euro and Sweden Krone pair. It shows how much the EUR (base currency) is worth as measured against the SEK (counter currency). For example, EUR/SEK = 10.5400 indicates that one Euro can buy 10.5400 Sweden Krones.
Although Sweden is in the Euro-Zone and is required to adopt the Euro currency a loophole has allowed the nation to maintain its 230 year old krona (crown). The EUR/SEK has been in a 6-week rally since late-December lows in the 10.1200 region.
Sweden has been in the news in recent weeks for the country’s decision not to lockdown the economy due to COVID-19. The government has enforced social distancing rules but decided to keep most bars, restaurants, schools and retail shops open. The premise being keeping the country open would mean its younger, not-at-risk population would develop immunity against the virus, potentially leading to herd immunity.
Goldman Sachs has begun to establish short positions on the dollar as the reopening of economies is expected to lure investors out of the traditional safe-haven currency.
In particular, they highlighted the Norwegian krone as being well-positioned to outperform during the remainder of the coronavirus crisis, and recommended shorting the USD/NOK pairing.
″(Norway’s) demographics and domestic medical infrastructure make it better equipped for the outbreak than many other countries, and its strong fiscal position puts it at a distinct advantage,” Goldman analysts, led by co-heads of global foreign exchange, Zach Pandl and Kamakshya Trivedi, said in the note on Sunday.
“While others are forced to either limit their fiscal policy support or dramatically increase borrowing—both potentially currency negatives—Norway is able to repatriate funds from its investments abroad helping support the economy and the currency.”
Now this is how the big banks trade. Goldman is shorting the USD/NOK with a target price of 8.75 and a stop lost at 10.25. They can trade like this because they have the funds to push the Market in either direction. However, this trade set-up represents a Reward: Risk that is less than 1:1.
So lets analyze the charts based on supply and demand.
Monthly Chart (Curve Timeframe) - the monthly demand is at 8.20000
Weekly Chart (Trend Timeframe) – the trend is up.
Daily Chart (Entry Timeframe) – the chart suggests to say patient and wait for a trade set-up, but two possible levels forming could be the setting up for a trade in the coming days/weeks.
This post is my personal opinion. I’m not a financial advisor, this isn't financial advice. Do your own research before making investment decisions.
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