NOK/SEK rallied to a high of 1.1149 and I have taken profit on my long idea from October 17 at 1.0917.
There seems to be indecision on the daily chart but, with the price now firmly above the 20-day moving average, one way of playing long positions is to move stops up to 1.1020 – this would be just under the 20-day average and a 38.2% retracement of the rally from 1.0847.
The oscillators continue to suggest dips should be supported.
Keep an eye on GBP/USD, especially with the daily chart looking quite constructive. The pair has broken above the July downtrend, as well as the 20-day moving average at $1.6082. The price has also broken out of the wedge pattern and is testing the neckline of the inverse head and shoulders pattern at $1.6160. A close above $1.6160 would technically target $1.6450 to $1.6500.
The stochastic oscillator has printed a higher high and suggests that the price should stay supported.
The FOMC meeting is key for the USD and risk appetite in general, and I expect the statement to be closely watched by traders. There is no press conference as such, but my personal belief is that QE will be closed off, marking what will be a new chapter in US monetary policy. The statement should continue to voice a ‘significant under-utilization’ of the labour market and a ‘considerable’ period of time between the end of QE and the first rate hike.
One issue which should be closely monitored is how much concern the Fed show around falling inflation expectations, especially after St Louis Fed president James Bullard’s recent comments. A lack of concern in the statement could be a positive for the USD.