Currencies: New opportunity for the euro against Nordic currencies

Let's put aside the endless and recurring questions about the timing of the first rate cuts to focus on a technical situation which we find interesting. The euro is back on technical support against several currencies, including the NOK and SEK. Here's a quick update.

Before we begin with THE configuration of the week, let's get the nitty-gritty out of the way. The yen and the Swiss franc remain the weakest currencies, which are naturally favored for selling from a carry trade perspective. However, the USDJPY should continue to fluctuate within a wide range between 158.30/160.35 and 151.90. EURCHF has come close to parity, but has yet to reach it. In fact, the high reached at 0.9930 corresponds to one time the amplitude of the late 2022 rise carried over to the December 2024 lows.

But let's get back to the EURNOK, or rather the case we're interested in this week. The following chart shows the pair's weekly performance over the last five years. After rising sharply between 2022 and 2023, the currency has entered a triangle-shaped consolidation, shown in blue. Support is just around the corner, at 11.2390. Ideally, a final downtrend towards this threshold is needed to complete the triangle, whose exit is then expected from above. As a precaution, we'll take the break of 11.17 as the threshold for invalidating this expectation.

Source: Bloomberg

In the shorter term, the EURSEK is also close to interesting support at 11.43, which must hold to maintain the bullish configuration underway since December 2023.