Euro Outlook:
- The Euro[1] has been left to the whims of broader markets, but a look at some of the non-major EUR-crosses suggests that risk appetite continues to improve.
- While EUR/CHF[2] rates have broken out higher, EUR/NOK[3] and EUR/SEK[4] rates remain within consolidations that have bearish inclinations.
- According to the IG Client Sentiment Index[5], EUR/CHF[6] has a bullish bias.
Non-Major EUR-crosses Look Optimistic
In recent days we’ve looked at the major EUR-crosses[7], surmising that the Euro itself is without a major thematic influence and instead remains at the whims of the broader markets. Considering another perspective, looking at the Euro through the lens of non-major EUR-crosses, a similar story unfolds: there is no singular thread driving price action around the Euro itself. Instead, taking recent pricing action in aggregate in EUR/CHF, EUR/NOK, and EUR/SEK rates, a narrative unfolds: risk appetite is improving, plain and simple.
EUR/NOK RATE TECHNICAL ANALYSIS: DAILY CHART (February 2019 to February 2021) (CHART 1)
For all the talk about the impact of oil[8] prices on the Canadian Dollar[9] (energy is 11% of Canada GDP), the Norwegian Krone is effectively twice as sensitive (energy is 20% of Norway GDP). The rally in oil prices at the start of 2021 has left EUR/NOK vulnerable for a deeper pullback, and the consolidation occurring in EUR/NOK in recent weeks suggests that the pair is funneling into the vertex of the symmetrical triangle formed by the rising trendline from the January 2013/July 2019 lows and the March 2020/January 2020 highs.
Seeing how symmetrical triangles are neutral patterns, we’ll look to the recent sideways range as key thresholds to identifying the
