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IronFX Essential Intraday Comment | 18/06/2015

• The dollar traded lower against almost all of its major counterparts during the European morning Thursday, remaining subdued after the FOMC decision last night. The greenback was higher only against NOK.

• The Swiss National Bank kept rates unchanged, as expected, in order to help to weaken CHF over time. In the press conference following the decision, President Jordan repeated that the Bank will remain active in the market, in order to prevent CHF from strengthening. However, the on hold stance disappointed some market participants and CHF strengthened on the news.

• On the other hand, Norway’s central bank cut its key policy rate to 1%, in line with market consensus of a 25bps rate cut. In the statement following the rate decision, the Bank said that the current assessment of the outlook for the Norwegian economy suggests that the key policy rate may be reduced further in the next few months. Given this, NOK could see renewed selling interest.

• UK retail sales beat expectations and rose 0.2% mom in May from 0.8% mom in April. The low unemployment rate along with the rising wages support consumer spending, which supports the UK recovery. This suggests a strong momentum in UK growth in Q2 and GBP could strengthen further if data continue to surprise on the upside.

• USD/NOK traded higher during the European morning Thursday following the rate decision by Norges Bank. The pair hit support slightly above the 7.5800 (S2) barrier and surged to hit resistance at 7.7200 (R1). USD/NOK is trading within a possible wedge formation and therefore a break above the upper bound of the wedge could initially challenge the resistance of 7.8000 (R2). A break above that level could set the stage for extensions towards the next resistance at 7.8700 (R3). Our momentum studies support that we could see the rate trading higher. The RSI rebounded from its 30 line and edged higher, while the MACD, although negative has bottomed and could move above its trigger line soon. As for the broader trend, the rebound from the 200-day moving average on the 18th of May suggests that the wedge could be just a corrective pause and that the prevailing uptrend could resume at some point.

• Support: 7.6450 (S1), 7.5800 (S2), 7.5000 (S3)

• Resistance: 7.7200 (R1) 7.8000 (R2), 7.8700 (R3)

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