OVERVIEW – The regional currencies have rebounded
quite nicely thus far on Wednesday despite the softer batch of
inflation data out of Sweden and GDP from Norway in the previous day.
The resurgence in demand for higher yielding currencies along with a
very well bid commodity market has also helped to keep the Scandis well
bid on the day, with the NOK and SEK standing out as some of the top
performers. Looking ahead, Swedish consumer confidence and Norwegian
unemployment data will be the key releases to watch on Wednesday.
Traders should also expect to see some lighter trading volumes after
today as the US gets ready for the Thanksgiving holiday.
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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