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 to run.

 

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