OVERVIEW – The latest round of Norwegian industrial data was less than impressive, while Norges Bank Governor Gjedrem has said that local banks need to coordinate regulatory standards that go beyond minimum requirements in an effort to protect against unexpected losses. Nevertheless, the single currency still outperforms many other major currencies on the day, with the downbeat Bernanke comments and rebound in commodity prices helping to bolster the correlated NOK. However, both the NOK and SEK continue to show signs of technical weakness against both eh EUR and USD and we continue to recommend looking to sell the regionals over the medium-term. There is no data scheduled for release on Tuesday in the region and the local currencies are expected to trade off of broader global macro price action.

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 now be well capped ahead of 16.00, in favor of a retest on 15.00. 

 

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