OVERVIEW – The rebound in risk appetite and concurrent surge in commodity prices in the early week has once again fueled some fresh currency buying with the highly correlated regionals benefiting as a result. Gold prices have rallied to record highs by $1160, while crude oil is inching back towards $80. There are no economic releases scheduled for Mionday, so look for the krona and krone to trade off of the broader global macro price action. In Norway, FinMin Johnsen has been on the wires saying that the country will need to remove government stimulus in order to help offset undue NOK appreciation. Norway was the second major economy to reverse the global monetary easing cycle with the relative strength in the economy likely to result in more hikes in the near future. The NOK is the best performing currency in the second half of the year, up some 7% against the Euro and 14% against the USD. However, manufacturers in Norway are starting to feel the pains of a stronger currency and would like to see the krone reverse course to help bolster their bottom line profits.

Eur/Sek pullbacks should be well propped ahead of 10.15 with the market in the process of carving a meaningful base on the daily chart. Look for the latest bullish price action to now open the next push back towards the recent range highs by 10.53. Only back under 10.15 concerns.

Eur/Nok despite the latest setbacks, we still view the overall price action as constructive since the market broke back above 8.41 in mid-October. Look for the price to be well supported ahead of 8.30, in favor of a bullish resumption back above key short-term resistance at 8.56 over the coming days. Ultimately, only below 8.24 negates.

Usd/Sek our view is still constructive at current levels despite the latest setbacks and favors USD appreciation over the coming weeks.  We contend the market is attempting to carve out a major base rather than in the process of some bearish consolidation. The recent break back above 7.10 confirms bias and exposes 7.40-50 further up. Any setbacks are expected to be well supported ahead of 6.75, while back above 7.20 accelerates. 

Usd/Nok even with the latest pullbacks, we still retain a constructive outlook for the pair with the market looking to carve out a major double bottom on the daily chart.  We do not anticipate a retest of the recent 5.50 lows and instead favor a bounce at current levels back towards neckline resistance at 5.85, a break of which will trigger the double bottom formation.

Gbp/Nok recovery rally has pulled back since reaching 9.53 in the previous week, but our outlook remains constructive, and a higher low is now sought out above 9.00, ideally by 9.23, ahead of the next upside extension beyond 9.53.

Nok/Jpy as had be warned, the market was well overextended above 16.50 and the price has since retreated back into the well defined range. Deeper setbacks are now seen towards 15.50 over the coming sessions.  Rallies are expected to be well capped ahead of 16.00.
 

Written by Joel Kruger, Technical Currency Strategist for DailyFX.com
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