OVERVIEW – The lack of any data on the domestic
front over the past couple of days have left the regional currencies
trading off of broader global macro themes and price action. We have
seen a sense of trepidation creep in over the past several hours that
has weighed on sentiment and forced some profit taking in the riskier
and higher yielding currencies. Also see weighing on risk appetite has
been the pullback in commodity prices with both oil and gold well off
on the day thus far. These developments have thereby resulted in some
unfavorable price action for the NOK and SEK with both currencies
underperforming across the board on the day. Our core view is one that
projects additional Scandi weakness over the medium-term, with the
overriding driver of our bias stemming from what appears to be a
technically overbought regional market.
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
If you wish to receive Joel's reports in a more timely fashion, e-mail firstname.lastname@example.org and you will be added to the "distribution" list.