EUR/NOK slid during the European morning Wednesday, after the better-than-expected inflation data from Norway reinforced the case for another Norges Bank hike during the second half of this year. The tumble came after the pair hit resistance near 9.6470 and drove the battle below the support (now turned into resistance) barrier of 9.6100. The rate hit support slightly below 9.5900, a level marked by the low of March 21st, and then, it rebounded somewhat. All that, combined with the fact that the rate is trading below the tentative downside line drawn from the high of March 8th, paints a cautiously bearish picture.
That said though, we would like to wait for a dip below 9.5900 before we get confident on more downside extensions. Such a break could set the stage for the low of November 13th, at around 9.5410. If that level fails to stop the tumble, its break may allow the bears to aim for the 9.5200 zone, which is marked by the low of the previous day.
Shifting attention to our short-term momentum studies, we see that the RSI topped fractionally above 50, moved lower, and now sits slightly above 30. The MACD lies below both its zero and trigger lines. Both indicators suggest downside speed and support the notion for some further near-term declines.
On the upside, a break above the crossroads of the 9.6470 level and the aforementioned downside line, may signal that the bears have started to abandon the action. Nevertheless, we prefer to wait for a break above 9.6690 before we start examining whether the bulls have taken the driver’s seat. Such a break may pave the way towards the 9.7050 hurdle, the break of which may allow extensions towards the peak of March 28th, at around 9.7450.
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