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Euro May Extend Gains vs NOK and Aim to Re-Test 11-Year High

Euro May Extend Gains vs NOK and Aim to Re-Test 11-Year High

Dimitri Zabelin, Analyst

Euro, Norwegian Krone, EURNOK – TALKING POINTS

  • EURNOK may rise this week and re-test 11-year high
  • Congestive price action in play after 4% jump in July
  • Longer-term outlook suggests underlying bullish bias

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EURNOK has risen over four percent since mid-July and briefly touched an 11-year high at 10.0972 before it cooled off and retreated close to the 38.2 percent Fibonacci extension level. A break below this point exposes the pair to support at around 9.84. The sideways movement of the pair suggests indecision or exhaustion after the significant climb in July to early August.

EURNOK – Daily Chart

Chart showing EURNOK

EURNOK chart created using TradingView

Zooming out to a weekly chart shows EURNOK is continuing to strongly climb along – and often times above – the seven-year rising support channel (red parallel lines). The pair is less than half of a percent away from reaching the highest exchange rate in its existence. Despite the congestion shown on a daily chart, the long-term outlook suggests a strong upside-bias that may continue throughout year-end.

EURNOK Exchange Rate Approaching Highest in its Existence

Chart showing EURNOK

EURNOK chart created using TradingView

Supportive fundamentals may be the driving force behind the pair’s ascendancy this week and beyond. Rising geopolitical uncertainty in Europe along with deteriorating trade relations could continue to pressure the export-driven Norwegian economy and sap capital from the Krone. Commentary from the Norges Bank’s last policy meeting suggests officials may slowly start pivoting from hawkish to neutral and maybe even dovish.

EURNOK TRADING RESOURCES

--- Written by Dimitri Zabelin, Jr Currency Analyst for DailyFX.com

To contact Dimitri, use the comments section below or @ZabelinDimitrion Twitter

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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