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    IronFX Essential Intraday Comment 10/07/15

    • The dollar traded mixed against its G10 peers during the European morning Friday. It was higher against JPY, AUD and CAD, in that order, while it was lower against NOK, CHF, GBP and EUR. The greenback was virtually unchanged against NZD and SEK.

     

    • The Norwegian krone surged after the country’s core inflation rate beat estimates of an unchanged rate and rose to 3.2% yoy in June from 2.4% yoy in May. The headline figure accelerated to 2.6% yoy from 2.1% yoy previously, a touch above the 2.5% target. The positive surprise is likely to take some pressure off the Norges bank to ease further at its September meeting. It could also suggest that the easing measures taken so far have started to feed through the economy, but we would wait to see July’s CPI rate as well before getting confident on this notion. The positive data along with expectations of no further easing by Norges bank could strengthen NOK somewhat in the near future.

     

    USD/NOK collapsed during the European morning Friday following the upside surprise in Norway’s CPI for May. The short-term bias has turned negative after the fall below the support (turned into resistance) barrier of 8.1350 (R2), and now the rate is headed towards the support line of 7.9700 (S1). A decisive move below that support barrier is likely to extend the plunge, perhaps for a test at the 7.8600 (S2) area. Our momentum indicators reveal downside momentum and magnify the case for further declines. The RSI fell below its 50 line and is now heading towards its 30 line, while the MACD, already below its trigger line, seems ready to fall within its negative territory. On the daily chart, I still see a longer-term uptrend. Therefore, I would treat the short-term downtrend as a retracement of that longer-term upside path.

     

    • Support: 7.9700 (S1), 7.8600 (S2), 7.7800 (S3)

     

    • Resistance: 8.0700 (R1), 8.1350 (R2), 8.2700 (R3)


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