– The back to back positive closes in European equities have certainly helped to keep the regional currencies well bid, with a recovery in oil
prices also helping to fuel some of the strength, particularly in the NOK versus the USD
. We do however continue to favor relative weakness in the Scandis over the medium-term, as longer-term technical studies seem to suggest that both the SEK and NOK are somewhat overdone. We would recommend focusing on looking to build longer-term long positions in EUR/NOK
. Looking ahead, Friday is a busy day, with key releases coming in the form of Swedish industrial production and Norwegian inflation.
Despite the continued downside pressure to fresh 2010 lows by 9.50, longer-term technicals show room for plenty of corrective upside. We do not recommend buying at current levels right now, but would instead wait for a dip below 9.50 to look to buy, or waiting for a bounce and looking to buy an upside break beyond 9.70. Any additional downside from current levels should be limited.
Eur/Nok A very well defined bear channel dating back to mid-2009 looks to have finally been violated, with the market rallying sharply back above 8.00 and suggesting that a key low has been set down by 7.67, in favor of additional gains over the medium-term back towards the 8.40-50 area. We would recommend looking for opportunities to buy below 8.00.
Remains under pressure since breaking down from a head & shoulders top that could now project additional weakness over the coming days into the 7.30’s. Nevertheless, we continue to maintain a broader bullish outlook here and would recommend looking to take advantage of any oversold interday studies, to look to establish a meaningful long.
This market has yet to break down through the neckline of its head and shoulders top and continues to consolidate above 6.30 despite the broader USD declines. As such, our overall outlook remains constructive with an eventual rally seen back above 6.73 over the coming weeks. Only a close below 6.30 gives reason for concern.
Has been in an impressive bull channel since mid-March, with the market rallying to the 9.80 area ahead of the latest minor pullback. Look for some additional weakness over the coming days, with a fresh channel higher low now sought out in the 9.50 area, ahead of the next upside extension beyond 9.80.
Although the market remains under pressure and appears to be consolidating just over its yearly lows, the cross has also managed to impressively hold above the 13.50 figure on a close basis. As such we could be on the verge of seeing another bounce and we would recommend looking for a break back above 13.80 to confirm and potentially accelerate gains back towards 14.50. Below 13.50 negates.