OVERVIEW – We have often written about our theory that the price action in the regional currencies serves as a formidable leading indicator for the broader price action in the FX markets. Both the krona and krone are highly correlated to global macro themes and as such, the direction that the local markets take, will often prove to be influential in gauging direction in the other major currencies. On Tuesday thus far, the two regional currencies are the weakest across the board and as such, this could be warning of an escalation in currency selling and risk related profit taking in favor of some flight to safety buying.
Eur/SekHas broken to yet another yearly low by 9.30, and a fresh lower top is now confirmed by 9.53 ahead of the next downside extension which exposes a test of next key psychological barriers by 9.25. Daily studies are however looking stretched, but a break back above 9.53 would be required at a minimum to delay the current structure.
Eur/Nok Overall price action remains quite choppy with the market most recently stalling out ahead of the multi-day range lows by 7.80 and bouncing back into the mid-range. From here, look for additional upside to test the range highs over the coming days which come in by 8.20. Look for a break back above the 8 handle to confirm and accelerate. Below 7.80 delays.
Usd/SekThe market has been locked in some choppy sideways trade over the past several days since rallying sharply after stalling out ahead of the 7 handle, and from here it is difficult to determine whether we are in the process of carving out a higher low above 7.04, or a lower top by 7.51 ahead of the next drop. As such, look for a close back above 7.51 or below 7.20 for clearer directional bias.
Usd/Nok The cross looks to have carved out a meaningful base ahead of 5.90, following the latest surge back above 6.20. From here it is difficult to determine whether or not the rally will continue, with the downtrend from June still intact and the market potentially looking to carve a fresh lower top below 6.40. As such, we would need to see a break back above 6.37 to encourage an official shift in the structure and open some fresh upside.
GBP/NOK DAILY
Bloomberg
Gbp/NokThe market has been well capped by some solid range resistance just over 9.80 to result in the latest minor pullback. However, the overall structure remains quite bullish with the cross trending higher over the past few months, and we would expect to see any setbacks well supported ahead of 9.40. A break and close back above 9.82 would also confirm bullish bias and accelerate gains. Tuesday’s bullish price action looks to be quite encouraging.
Nok/JpyDespite the latest break to fresh 2010 lows below multi-week range support by 13.50, the overall price action still remains quite consolidative in the 13-14.50 area and our recommendation is to continue to play the range high lows.
Written by Joel Kruger, Technical Currency Strategist for DailyFX.com
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