OVERVIEW – Norwegian consumer confidence has just
come in on the better side of expectation and this has helped to
marginally prop the currency which is still lower on the day against
the USD. On the whole, the regionals have been showing relative
weakness with the resurgence in risk aversion and uncertainty over the
prospects for a sustained global recovery weighing. The latest RBA rate
decision has also made an impression on local traders, specifically in
Norway, after the RBA was arguably not nearly as hawkish as many had
been expecting. Norway is the only other major economy thus far to
reverse monetary policy, and a less hawkish RBA could warn of a less
hawkish Norges Bank going forward. The Norwegian central bank has also
expressed its concern over the appreciation in the krone, which could
act as an additional strain on the local currency, despite the more
encouraging outlook for the economy. On the day, global equities are
higher, while commodities track lower.
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. Latest price action reaffirms outlook with the market
finally taking out the multi-day consolidation highs by 10.53 to now
expose 10.60-70 further up.
Eur/Nok price action confirming our constructive
outlook and we favor of a bullish resumption back above key short-term
resistance at 8.56 over the coming days. A closer look at the daily
chart reveals the potential formation of a major double bottom.
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 has been well confined to a very choppy range
trade over the past several weeks, largely defined between 15.00 and
16.50. The latest pullbacks have once again been well supported in the
15.00 area and from here we would recommend to continue to play the
range and look to buy in anticipation of a push back towards 16.00.
Daily studies are just turning up from oversold and show plenty of room
Written by Joel Kruger, Technical Currency Strategist for DailyFX.com
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