OVERVIEW – The regional currencies are amongst the weaker performing currencies on the day, with any gains seen in Wednesday trade now be relinquished. While many analysts project additional strength in both the NOK and SEK going forward, our core view is net bearish on the Scandis over the medium-term, with technical studies showing some major tops in the local currencies against both the Euro and USD. As such we continue to recommend selling both the krona and krone on any rallies in anticipation of additional weakness over the coming weeks. Looking ahead, Thursday’s calendar is stacked with data, with much of the focus to be centered on Norwegian and Swedish inflation. Any sign of softness within the respective readings will no doubt weigh on the Nordics.

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 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 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 ahead of the latest bounce back into the range. From here, we recommend continuing to play the range high-lows.

 

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