Scandi Daily 03.09
OVERVIEW – Norwegian consumer confidence has just come out stronger than expected, but the data has done little to infuse any fresh buying of the regional currency, with broader global macro themes at play. It seems as though risk sentiment as waned, and with global equities and commodity prices faltering on Tuesday, the regional currencies have been hit hard and are amongst the weakest currencies on the day. We continue to favor selling both the Nok and Sek against the major currencies, with the nordics overdone on a medium-term basis and showing plenty of room for a material correction. Eur/Sek looks like it could be attempting to carve out a double bottom on the daily chart.
Eur/Sek Although the market has come back under pressure following a mild relief rally out from the 9.67 yearly lows, we still contend that price action is highly overextended and the cross is in the process of carving out a short to medium-term base at current levels, ahead of some significant upside over the coming weeks. Look for the current setbacks to once again be well supported ahead of 9.65, with the potential for the formation of a double bottom on the daily chart.
Eur/Nok While daily studies are not as overdone as in Eur/Sek, we contend that a meaningful low has also been put in by the 8 handle, with recent price action confirming bias. From here, look for some renewed strength back towards the recent range highs at 8.26 over the coming days.
Usd/Sek Our view is highly constructive at current levels and favors continued 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. Any setbacks are expected to be well supported by 7.00, with a higher low sought out ahead of the next major upside extension towards 7.50-75 over the medium-term.
Usd/Nok Has managed to recently clear the multi-week range highs by 5.90 and we believe this now opens some fresh medium-term upside over the coming weeks. Look for a higher low to now carve out by 5.80 in favor of a bullish resumption back above 6.05 over the coming days.
Gbp/Nok The market has now traded back down to retest the major base by 8.80 from October 2009 but has failed to break below this strong support. With daily studies now oversold, we would recommend that traders look to build a fresh long position at current levels in anticipation of some major upside over the coming days. Stops should be placed on a close basis below 8.80.
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. Rallies have once again been well propped in the 15.00 area ahead of the latest minor bounce, and we continue to recommend playing the range.
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 email@example.com and you will be added to the "distribution" list.
If you wish to discus this topic or any other feel free to visit our Forum page
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.