OVERVIEW – The regional currencies are the star
performers on the day with the NOK and SEK outperforming across the
board. The relative strength in the locals is interesting with no real
catalyst to specifically drive such demand other than some better
economic data in Norway, rising commodity prices and improved risk
sentiment. The economic calendar for Thursday is empty and the Scandis
will be left trading off of the broader global macro themes. We have
for some time held a sell on rallies outlook, and the latest bout of
strength in both the krone and krona is once again testing our
convictions. However, we do not expect the nordic currency gains to
extend much further. As such, we once again recommend selling both the
NOK and SEK against the Euro and USD into the latest rallies.
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 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 have turned up from oversold and show plenty of room to
Written by Joel Kruger, Technical Currency Strategist for DailyFX.com
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