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US Dollar Analysis: USD/SEK, USD/NOK Charts After Fed Rate Cut

US Dollar Analysis: USD/SEK, USD/NOK Charts After Fed Rate Cut

2020-03-04 04:00:00
Dimitri Zabelin, Analyst
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US Dollar, Swedish Krona, Norwegian Krone, USD/SEK, USD/NOK – TALKING POINTS

  • US Dollar outlook bearish vs Swedish Krona and Norwegian Krone
  • Unexpected 50 bps Fed rate cut plunged Greenback against G10 FX
  • USD/SEK eyeing December lows, USD/NOK January uptrend broken

USD/SEK FORECAST

Since topping at 9.8115 (gold-dotted line), USD/NOK has tumbled over 3.50 percent amid market-wide weakness in the US Dollar while the Swedish Krona surged against a basket of G10 currencies. Selling pressure may persist until the pair hits the multi-layered floor between 9.3431 and 9.2948, the same level where the December uptrend began. In four days, USD/SEK wiped out a month worth of gains.

USD/SEK – Daily Chart

Chart showing USD/SEK

USD/SEK chart created using TradingView

USD/NOK PRICE CHART

USD/NOK may be in for a bearish correction after it broke the January uptrend with a daily close and exposed the pair to support at 9.2000. An aggressive USD/NOK selloff may be deterred if the pair bounces back from the floor at 9.1389. However, if downside momentum is strong enough to puncture the layer below it at 9.1389, this may inspire further liquidation and cast a bearish overhang on the pair’s trajectory.

USD/NOK – Daily Chart

Chart showing USD/NOK

USD/NOK chart created using TradingView

FOMC RECAP: WHY DID THE FED CUT RATES BY 50 BPS?

On Tuesday, the FOMC committee unanimously voted to slash interest rates by 50 basis points outside of their regular scheduled meetings. The last time the Fed acted this way was in 2008 amid the global financial crisis. Chairman Jerome Powell said the risks to the outlook from the virus has caused a “material” change to their baseline projections. As such, it required a response from the central bank.

Markets initially rejoiced and equities popped higher, but sentiment quickly turned sour and the indices retraced some their gains. The Fed’s aggressive easing measure could be understood through the prism of investors who worry that underlying fundamentals may be worse than imagined. The Fed’s unexpected rate cut could be read as an unofficial acknowledgement that economic circumstances are indeed worrisome.

US DOLLAR TRADING RESOURCES

--- Written by Dimitri Zabelin, Jr Currency Analyst for DailyFX.com

To contact Dimitri, use the comments section below or @ZabelinDimitrion Twitter

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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