OVERVIEW – While some setbacks in the regionals on Friday could not be prevented, in light of the much stronger than expected US employment data, both the NOK and SEK have been showing better bid against many other major currencies on the back of some sounder local economic data and optimistic comments on the outlook for the nordic economies. Most recently, Norwegian manufacturing data has come in better than expectation, while Swedish FinMin Borg has said that the economy will probably grow faster in the next couple of years than expected. Nevertheless, our technical outlook for the local currencies is not as encouraging, as we continue to see the regionals as overbought on a medium-term basis and due for some additional weakness against both the USD and Euro over the coming weeks. Looking ahead, all eyes will be on today’s Swedish budget balance and Norway’s industrial production data.

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 a bounce back into the mid-range. Look for the market to find some resistance in the 16.00 area.

 

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