The USD/NOK saw a large amount of bearish price action sparked yesterday, after the OPEC announcement regarding Crude Oil production cuts.
The USD/NOK is near the 10.49000 mark as of this writing, this after falling from a high of nearly 10.68100 yesterday. On the 28th of September the USD/NOK climbed momentarily above the 11.00000 level, but since then has incrementally begun to break support ratios.
Yesterday’s high saw a sudden spike downwards generated when OPEC officially made it clear they will cut Crude Oil production by one million barrels a day. Norway is not a member of OPEC, but because of its vast amount of energy resources within the USD/NOK reacts depending on the speculative price of Crude Oil and Natural Gas.
Speculators have plenty to Ponder Regarding the USD/NOK
The combination of rumors regarding the cut to Crude Oil production from OPEC, and the suspicion the U.S Federal Reserve may begin to lessen their hawkish rhetoric has helped the USD/NOK attain a bearish trend the past handful of trading days. Speculators who felt the USD/NOK had been overbought near the 11.00000 have likely been rewarded. However, the question is what happens next as financial houses try to figure out outlook both technically and fundamentally.
If Crude Oil prices remain within sight of the 90.00 USD ratio, this would likely help create some downward momentum for the USD/NOK.However, traders must keep in mind that jobs data including important earnings statistics will come from the U.S tomorrow which can shake behavioral sentiment quickly.
The Sudden Downward Trend in the USD/NOK is Attractive but Remains Dangerous
On the 23rd of September the USD/NOK was trading near the 10.43000 level before the currency pair began to experience a strong amount of buying. The USD/NOK is now coming within sight of this important support level. If the price of Crude Oil remains solid near term, this will likely create bearish sentiment in the USD/NOK within financial houses. However, speculators need to be careful because tomorrow’s jobs numbers will impact sentiment too globally and the USD/NOK will react to the published outcome. If inflation data via the hourly earnings data comes in stronger than estimated this could create renewed buying of the USD/NOK.
However, if the earnings data tomorrow from the U.S meets expectations and the energy price sector remains solid, the USD/NOK could continue to see its selloff build additional momentum. Speculators need to use solid risk management and keep their targets realistic. If the 10.43000 to 10.37000 levels below start to be challenged, this could indicate the USD/NOK has further room to explore lower.
Norwegian Krone Short Term Outlook:
Current Resistance: 10.53700
Current Support: 10.44200
High Target: 10.67900
Low Target: 10.30000