It is PMI season, and the upbeat Norway Manufacturing PMI is helping the USDNOK hit 1-week lows, just days after the USDNOK had touched off all-time highs on falling crude prices.
Norway’s DNB Manufacturing PMI for February 2020 climbed to 52.2, which was higher than the previous figure of 51.1 as new factory orders led to increased factory activity and growth in employment.
The USDNOK was last seen trading at 9.35541 or 0.2% lower on the day, down from Friday’s all-time high reading of 9.4953. Increasing bets that the US Federal Reserve may aim to protect the US economy from the impact of the coronavirus outbreak by raising rates provided an opportunity for USDNOK traders to play the divergent fundamentals.
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Technical Outlook for USDNOK
Buyers were unable to sustain Friday’s spike to all-time highs, as the USD was sold off in late Friday trading to push down the price on the day and turn the daily candle into a hammer. This set the tone for a drop in the USDNOK confirmed by today’s upbeat Norway Manufacturing PMI data.
The long-term outlook for the USDNOK continues to remain bullish. Price retreat from Friday’s highs is a pullback move from the upper boundary of the long-term ascending channel that connects price action from March 2018 till date. Within this channel, a smaller channel exists which encapsulates price action of the last two weeks. The lower border of this small channel intersects the horizontal support at 9.31154, which is where today’s price move found support.
The divergence between the RSI and price is evolving on the charts; this may prompt a retest of 9.31154. A breakdown of this price level also leads to a failure of the smaller channel, opening the door towards the 9.22477 support area. 9.10269 is another support level which could become relevant if 9.22477 gives way.
On the flip side, the bounce on 9.31154 could lead to a price recovery to the upper boundary of the smaller channel. A breakout from this boundary may allow the USDNOK to retest the previous all-time high.
Price may even trade within the channel until strong fundamentals decide otherwise.
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