– Market participants continue to see additional strength in the NOK, with the central bank having adopted a restrictive monetary policy on the back of solid economic fundamentals, despite the global slowdown. The country’s massive sovereign wealth fund has given additional reason to be buying into the local economy, after saying that it looks for opportunity in the latest turmoil, after having reduced its holdings in Greece, Portugal and Spain several months back and being well positioned to capitalize. However, as technicians, we would proceed with caution, with the USD
breaking higher and showing additional room for strength, while the regional currencies are looking quite stretched/overbought on a medium-term and longer-term basis against the Euro
The market has turned up quite sharply over the past few sessions and a base could finally be in place by 9.55. However, we will need to see a close back above 9.80 to confirm medium-term basing prospects and accelerate gains. For now, we recommend the sidelines.
Has broken to fresh 2010 lows by 7.78 after easily clearing next downside barriers by 8.00 in recent trade. Daily studies are however looking stretched and we would not rule out the potential for a bounce from here. Nevertheless, a break back above 8.05 will be required at a minimum to get things moving and reaffirm basing prospects.
Our view is highly constructive at current levels and favors continued USD appreciation over the coming weeks. The break to fresh 2010 highs above 7.52 now officially confirms a medium-term higher low by 7.00 and opens the next upside extension towards 8.00-8.20 over the coming weeks. Look for setbacks to now be well supported in the 7.30-40 area.
The overall structure remains grossly constructive and a fresh medium-term higher low by 5.80 is now confirmed following the latest break to fresh 2010 highs beyond 6.10. From here, the risks are for additional gains, with the next key medium-term target coming in by 6.40 over the coming weeks. Any setbacks should be well supported ahead of 5.95.
The market has finally reached our 9.20 inverse head & shoulders objective after breaking out from a multi-day consolidation in the 9.10 area. From here, we look for any setbacks to be well propped by the former resistance now turned support at 9.10, ahead of the next upside extension towards 9.30-40 over the coming weeks.
Has been well confined to a very choppy range trade over the past several months, largely defined between 14.00 and 16.50. Setbacks have once again been well propped by 14.00 ahead of the latest sharp bounce back into the mid-range, and we continue to recommend playing the range high-lows.
Written by Joel Kruger, Technical Currency Strategist for DailyFX.com
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