scandi daily

OVERVIEW – There is a slew of data set for release on Monday in the region but the overriding price action will most likely be more heavily predicated on global macro themes. Friday’s sharp pullback in risk appetite was concerning and should this continue into Monday, we would expect to see the regional currencies come under additional pressure. However, should the market be able to overcome the setback, the focus is likely to shift back towards the global recovery and anticipated shift in monetary policy as central banks begin to plan their exit strategies. The NOK is likely to be a solid beneficiary in this scenario with Norway already raising rates in the previous week to make yield differentials all the more attractive. 

Eur/Sek continues to consolidate off of the 2009 lows from August and we contend that the market is in the process of carving out a medium-term base. Any setbacks are expected to be well supported ahead of 10.05, with a break and close back above 10.45 to confirm basing prospects and accelerate gains.

Eur/Nok fresh yearly low last Thursday by 8.24 but we feel that the market is finally now exhausted and on the verge of some major upside over the medium-term.  The latest break back above 8.40 now confirms and should accelerate gains towards 8.50-60.  Only back below 8.30 would delay.

Usd/Sek traded down to a fresh yearly low by 6.75 ahead of the latest sharp reversal. Despite the underlying downtrend, our view is nevertheless constructive at current levels 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. Monday’s break back above 7.10 should confirm bias and get things moving.

Usd/Nok has now officially carved out a meaningful low by 5.50 with the market racing higher on Wednesday to trigger a double bottom formation. The break back above the neckline at 5.66 now opens a measure move upside extension towards 5.80 over the coming sessions. More gains are seen on a break above 5.87.  Setbacks should now be well propped ahead of 5.60.

Gbp/Nok finally showing signs of recovery after basing out by 8.82 in the previous week. Daily studies show plenty of room for additional corrective upside, and we look for a push back towards 9.50 over the near-term. Setbacks should now be well supported ahead of 9.20.

Nok/Jpy as had be warned, the market was well overextended above 16.50 and the price has since retreated back into the well defined range. Deeper setbacks are now seen towards 15.00 over the coming sessions.  Rallies are expected to be well capped ahead of 16.00.

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 jskruger@fxcm.com and you will be added to the "distribution" list.

DailyFX provides forex news on the economic reports and political events that influence the currency market.
Learn currency trading with a free practice account and charts from FXCM.

• free demo account
• forex courses
• open an account
• real time news
• free webinars