OVERVIEW – Not too many developments on the domestic front with the only noteworthy event coming from a Norwegian FinMin who has said that the country will do what it can to support Iceland’s government in stabilizing the economy. Overall, we have seen the reduced fears over the Greek debt crisis help to prop the Euro, which has in turn forced some regional selling against the major currency. The Euro had been very weighed down against the nordics, and is finally in the process of attempting to mount a much needed and healthy bounce against both the NOK and SEK.
Eur/Sek had come back under pressure over the past several days with the market trading down to a 12+ month low by 9.85. However, despite the weakness on the cross, we are not convinced of these moves and continue to see value at current levels with the market more likely to bounce rather than to continue to drop. A break above 9.90 will confirm and accelerate gains back towards 10.10, while only a close below 9.80 gives reason for concern. It is worth noting that the daily RSI is well below 30.
Eur/Nok had come back under pressure over the past several days with the market trading down to a 12+ month low towards 8.00. However, despite the weakness on the cross, we are not convinced of these moves and continue to see value at current levels with the market more likely to bounce rather than to continue to drop. A break above 8.10 will confirm and accelerate gains back towards 8.25, while only a close below 8.00 gives reason for concern.
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 ahead of 7.15, with the latest break back above 7.35 confirming bias and likely to accelerate gains towards 7.50-75 over the medium-term.
Usd/Nok has just managed to clear the multi-week range highs by 5.90 and we believe this now opens some fresh medium-term upside over the coming weeks. However, with the market only just exceeding the range highs we would not rule out the possibility for additional corrective declines and would recommend buying a dip towards 5.75.
Gbp/Nok in the process of rolling back over after stalling by the multi-day range highs just over 9.50. Look for the latest pullback into the 9.15-20 area to now be well supported ahead of an eventual sustained break above 9.50 which should open some medium-term gains towards the 10 handle over the coming weeks. Only a close back below 9.20 gives reason for concern and dips should be bought.
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 bounce back into the range. From here, we recommend continuing to play the range.
Written by Joel Kruger, Technical Currency Strategist for DailyFX.com
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