NOK: The Big Winner During The European Morning

 | Sep 20, 2013 01:24AM ET

After yesterday’s FOMC decision to keep its bond-buying program unchanged, the dollar was driven lower against its G10 pairs. The dollar regained ground against the Japanese yen and the British pound during the early European morning. The yen moved lower after the country’s trade balance release, which indicated a deficit of JPY 960.3 in August. The GBP/USD moved lower during the European morning losing a part of its early gains immediately after a weak UK retail sales (-0.9% vs 0.4 exp m/m). However, the rest of the G10 currencies moved quietly during the European morning, maintaining their gains against the dollar.

The NOK was the biggest mover among the G10 currencies. NOK strengthened immediately against the dollar after the Norges Bank decided to leave its key rate unchanged at 1.5%, as widely expected and the rate path was lifted, excluding any probability for a rate cut.

The USD/NOK has been moving in a downtrend since the beginning of September. During the European morning the pair managed to penetrate downwards the 5.8098 level (current resistance), and found support at 5.7328 (S1). At the time of writing the rate lies between the aforementioned levels, riding the lower Bollinger band. Both the 20- and 50-hour moving averages lie below the 200-hour moving average and alongside with MACD’s negative value, they confirm the price’s bearish momentum. However, the RSI remains oversold pointing upwards, and an upside pullback accompanied by the oscillator’s exit of that zone should not surprise us.

• Support levels are identified at 5.7328 (S1), followed by 5.7025 (S2) and 5.6601 (S3). The latter two are identified from the daily chart.

• Resistance is found at 5.8098 (R1), followed by 5.8456 (R2) and 5.8786 (R3) respectively