COMMENT-Weekly resistance could spark a short-term SEK Rally

On interest rate divergence alone NOK/SEK has been a long play since December and there is a case for further gains. However, the latest rally is currently stalling at technical resistance and the SEK might stage a brief recovery.

The weekly Ichimoku cloud has contained the Viking cross, on a closing basis, since October 2023. The cloud base is at 1.0021 today.

Further resistance points are at 1.0085 and 1.0095, weekly Ichimoku cloud top and 200-day moving average, respectively.

A key 50% Fibonacci retracement level was breached last week at 1.0039, on-route to a trend high at 1.0051. The next retracement level off the 1.0482-0.9496 Aug. 2023 to Dec. 2023 drop provides a bull target at 1.0144. The 76.4% level behind at 1.0273.

Initial key support is at 0.9940, the 10-week moving average line. The minimum correction point, off the shorter-term 0.9712-1.0051 climb, is at 0.9971. The weekly low from late April also provides support at 0.9848.

While the Norges Bank maintains a hawkish bias and the Riksbank leans towards dovish caution following its May rate cut, the outlook for NOK/SEK remains bullish with any corrective pullback likely to find bargain hunter bids.