– The resurgence in global risk appetite continues to prop the regional currencies, with both the NOK and SEK performing well as investors look for riskier and higher yielding investments. Oil
prices have been very well supported, and this in conjunction with another higher close in US equities has helped to rally the NOK which had been lagging against the USD
over the past several days. Usd/Nok
has finally taken out some key support and this could warn of deeper setbacks over the coming days. Overall, we think the currency markets will continue to take their cues off of the price action in Eur/Usd
. Should the major currency pair extend gains yet again in Wednesday trade, we would expect to see another impressive session for the Nordics. However, should the Euro
falter, we could see the Scandis come under some heavy selling pressure. The economic calendar is empty in the region to confirm that market participants will indeed be focused on broader global macro developments.
Eur/Sek Despite the continued downside pressure to fresh 2010 lows below 9.50, longer-term technicals show room for plenty of corrective upside. Look for the latest setbacks to now be well supported by 9.40 in favor of some significant upside corrective action back towards 10.00 over the coming days. Only a close below 9.40 would negate and give reason for pause.
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 into the current dip below 8.00.
Usd/Sek 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.
Usd/Nok The market has finally taken out key support in the mid-6.70’s with the break below 6.75 now opening the door to deeper setbacks over the coming sessions. However, we still retain an overall constructive outlook, and would recommend looking to buy on dips towards 6.00.
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 below 9.50. However, bull channel support now comes in at current levels around 9.50, and we would look for a fresh higher low to carve out ahead of the next major upside extension.
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. Look for a close back above 14.00 this week to confirm basing and open a fresh test of the recent range highs by 14.50 further up.
Written by Joel Kruger, Technical Currency Strategist for DailyFX.com
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