USD/NOK
The dollar was stronger against almost all of its G10 peers during the European morning Friday, extending the gains that it made yesterday. USD regained some of its lost glamour after several Fed officials who spoke during the week reassured the markets that they were still on track to hike rates at some point this year. Those comments along with strong US jobless claims data kept USD supported. The greenback was unchanged only against GBP.
Norway’s official unemployment rate remained at 3.0% in March, in line with expectations. Retail sales rose 0.9% mom in February, a turnaround from the previous month and above market consensus. Despite the encouraging data, the moderate decline in oil prices dragged the currency of Europe’s largest oil exporter down with it. As we have mentioned several times, Norway’s fundamentals are on a solid basis. Unemployment has remained stable at low levels while the CPI, uniquely among the G10, is close to the Bank’s 2.5% target. However, lower oil prices are expected to affect activity in the country’s energy sector and this is likely to keep NOK under pressure, in our view.
USD/NOK traded higher after finding support at 7.7335 (S2), which happens to be the 76.4% retracement level of the 26th of February -18th of March up wave. The recent rebound gives me a reason to believe that the decline from the 18th of March was just a corrective move and that further bullish extensions could be looming. I would expect the rate to continue higher in the near future and challenge the resistance hurdle of 8.0760 (R1). However, a move above the next resistance at 8.1230 (R2) is needed to pull the trigger for larger upside extensions. Such a break could target the 8.4000 (R3) territory. Our short-term momentum studies support a higher rate. The RSI edged above its 50 line and points up, while the MACD, although negative, accelerated above its trigger and is getting closer to its zero line. As far as the overall trend is concerned, I see a positive picture here as well. USD/NOK has been printing higher peaks and higher troughs above both the 50- and the 200-day moving averages since the beginnings of September.
Support: 7.8960 (S1), 7.7335 (S2), 7.6160 (S3).
Resistance: 8.0760 (R1), 8.1230 (R2), 8.4000 (R3).
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