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Andreas Zanin
Analysis | July 28, 2021

In recent posts, we have outlined the long-term bearish fundamentals for the Euro and if the euro falls this will impact on the euro correlated currencies, and in this post we will look at trade setups in USD/SEK and USD/CZK. Our view of the fundamentals sentiment and technicals below.

First a quick summary of why we are bearish the euro: The market bought the euro earlier in the year on the view that the euro zone would mount a broad-based economic recovery and the ECB would remove stimulus and raise rates. Speculators went heavily long the euro and euro topped out in June and has moved sharply lower with speculators still holding a major long position. Our view is it will move lower as the economy continues to struggle and the ECB cannot remove stimulus anytime soon.

Both the Swedish and Cezch Economies are heavily exposed to euro zone economically and very sensitive to shifts in risk sentiment. If the euro continues to fall the SEK and CZK will fall more and you can see this in the fact that since June while the EUR has fallen on the USD it’s strengthened on the SEK and CZK.

Technical Analysis

Note: Our view of the techncials below note in terms of our targets they are derived from our view of speculative positioning, interest rate perceptions and historical over and under valuation.

USD/SEK Key Levels of Support and Resistance

If we look at the monthly chart, we have firm support at 8.50 and our upside targets longer-term are 9.00 with a possible run on to 9.50. In terms of timing the move on the daily chart, we can see that we moved through the 20-day moving average ( The Green Line) and have now come back above it and would buy above yesterday’s high. However, if we were to fall through 8.600 we would look to buy back through the level with a stop back behind major support at 8.500.

USD/CZK Key Levels of Support and Resistance

If we look at the monthly chart we now have good support at the monthly low at 21.40 and in terms of upside targets, we expect moves to 23.00 with a possible run on to 24.00 level. In terms of timing the move on the daily chart, we are finding support at the 20-day moving average and would buy a break of recent highs with a stop behind first level support or if we fell back to first level support, we would buy off the level on strength with a stop back behind major support at 21.40.

 

 

Research provided by LearnCurrencyTradingOnline.com

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