The US dollar initially pulled back a bit against the Norwegian krone on Friday but found the 200-day EMA to be supportive enough to turn things around and go higher. By doing so, the market has shown a little bit of resiliency, and if we can break above the highs of both the Thursday and Friday candlesticks, it is likely that we could go looking towards the 8.8 NOK level. On the other hand, if we turn around and break down below the bottom of the candlestick from the Friday session, we could go looking towards the 50-day EMA.
When you look at this chart, it does fly in the face of what has been going on in the oil market, meaning that we are starting to focus more on the interest rate differentials when it comes to some of these currencies rather than some of the typical correlations you would see such as the krone and crude. That being said, the US dollar continues to strengthen against almost everything, so some of the smaller currencies will probably pay the price.
When you look at the longer-term chart, we have formed a bit of a “double bottom”, but that does not necessarily mean that we need to go straight up in the air. Furthermore, if oil does recover quite significantly, it could have this market dropping below the 50-day EMA and opening up to move below the 8.5 NOK handle. Moving below there could open up a move all the way down to 8.3 NOK over the next several weeks.
If we can clear the 8.8 NOK level, then it is very likely that the USD/NOK pair would go looking towards the 9 figure. This market certainly looks as if it is trying to pick up a bit of momentum, and it is probably worth noting that the Wednesday impulsive candlestick coincided quite nicely with the major breakout of interest rates coming out of the United States. With this being the case, it is very likely that the pair should continue to climb, unless oil suddenly goes wild to the upside. Inflation continues to be a major concern in America, driving those rates higher, which feeds the cycle over and over, sending this market to the upside right along with other markets involving the greenback.
