OVERVIEW – The
regional currencies have come back under pressure on Tuesday, with only
the commodity bloc currencies putting in a worse performance thus far
on the day. There have been a flurry of risk negative developments over
the past several hours that have started to weigh on investor sentiment
and concurrently force a liquidation of risk related trades. Both the
SEK and NOK have therefore been exposed, with the heavily risk
correlated krona suffering from renewed fears over the stability of
the global banking system and the krone also hurting on similar themes,
along with some added concerns over the threat of a major pullback in
overstretched commodity prices. Swedish inflation data and Norwegian
GDP are due up shortly and could open the door for some additional
price volatility. Our core view continues to be net Scandi bearish with
room for some significant corrective declines in both the SEK and NOK
against the Euro and USD over the coming weeks.
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. 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
Written by Joel Kruger, Technical Currency Strategist for DailyFX.com
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