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