USDNOK
USDNOK jumps today after three days of consolidation at the five-month lows. Risk-off sentiment helps the greenback as investors run away from risky currencies and looking to cover in safe havens such as USD.
Fears of a second round of virus infections and dovish comments from Federal Reserve Governor Jerome Powell weigh on the pair.
Fed in its policy meeting yesterday kept the interest rates unchanged at 0.0 – 0.25%, as was expected by markets. Fed will continue to purchase treasuries at the current rate of $80 billion/month and mortgage-backed securities at $40 billion/month. Governor Powell said that rates will remain at current levels until at least 2022 or until the economy is on track to reach maximum employment.
The Fed projects that the U.S. economy will contract by 6.5% in 2020, while in 2021 will grow by 5% and the unemployment rate will be 9.3% in 2020, and then it is expected to drop to 6.5% in 2021 and to 5.5% in 2022.
On the economic data today, the United States Initial Jobless Claims came in at 1542K, below the consensus of 1550K on June 5. The Continuing Jobless Claims came in at 20.929M topping the expectations of 20M on May 29.
The U.S. Producer Price Index (PPI) came in at 0.4% beating the estimates of 0.1% in May, the year PPI reading came in at -0.8%, also above the forecasts of -1.2%. The Producer Price Index excluding Food & Energy came in at -0.1% in line with estimates.
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USDNOK trades 2.29% higher at 9.4997 in a strong move that tests the resistance at the 200-day moving average. The pair’s correction stalled at the five-month lows and from a deeply oversold level. The technical outlook for USDNOK is still bearish despite today’s rebound, but a close above the 100-day moving average might attract the bulls for a move higher.
On the downside, first support for USDNOK stands at 9.2746 the daily low. If the USDNOK breaks below, the next support zone will be met at 9.1942 the low from yesterday’s trading session.
On the flip side, the initial resistance stands at 9.5213 the daily high. A break above that level might challenge 9.6575 the high from June 2 trading session. A break above 9.6975 might target 9.9141 the 100-day moving average.