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 16.00.
 

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