Marshall Gittler
Trading Analysis
USD/NOK
The dollar traded unchanged or lower against all of its major G10 counterparts during the European morning Monday in the absence of any material economic events. It was lower against NOK, NZD and SEK, in that order.
The Norwegian krone was the main gainer after the country’s underlying CPI rose 2.5% yoy in October, faster than expected and an acceleration from 2.4% yoy in September. The increase puts core CPI back on Norges Bank’s projected rate path, which makes it unlikely that the Bank will cut rates at its meeting Dec. 11th. The Q3 GDP to be released next week should shed more light on the recent developments in Norway’s economy, thus I would see the current setback as renewed USD-buying opportunity. Until then, the various data coming from the country, would likely put the NOK under selling pressure.
USD/NOK plunged after Norway’s CPI was released and at midday in Europe, the price is heading towards our 6.6800 (S1) support line. This support level currently coincide with the 23.6% retracement level of 8th of May – 5th of November up move. The RSI moved lower and appears likely to enter its oversold field, while the MACD, which was already below its trigger line, entered its negative territory. These two indicators demonstrate accelerating bearish momentum and magnify the case for a further near-term decline towards our 6.6800 (S1) support hurdle. As for the broader trend, the rate is printing higher highs and higher lows above the light blue longer-term uptrend line (taken from back at the low of the 8th of May) and above the 50- and 200-day moving averages. Thus, I would consider the overall path to remain to the upside.
Support: 6.6800 (S1), 6.6400 (S2), 6.5700 (S3) .
Resistance: 6.8000 (R1), 6.8510 (R2), 6.9315 (R3).
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