USD/NOK Gapped Lower on the Open, however may Remain Rangebound until Thursday
|With news of the drone attacks over the weekend on Saudi Arabia’s largest oil facility, Light Crude Oil Futures (CL) gapped high in the Sunday evening session to a high of 63.34, almost 10% higher than Friday’s close. Prices have pulled back slightly but have yet to come close to retracing and filling the gap.
Source: Tradingview, FOREX.com
Norway is a large exporting oil country as well. So, it’s no surprise that the price of the Norwegian krone was stronger on the open (USD/NOK gapped lower at 8.9215). However, unlike crude, USD/NOK has managed to come all the way back and fill the gap at 8.9860. On a 240-minute chart, the pair is possibly forming a flag pattern, a continuation pattern which suggests a target near 8.76.
Source: Tradingview, FOREX.COM
Where can the USD/NOK go from here? USD/NOK has been trading in a tight trading range since September 5th between 8.9129 and 9.0151. We are likely to remain in that range as news begins to trickle out regarding who was behind the attacks.
Source: Tradingview, FOREX.com
Houthi, a rebel group out of Yemen, has claimed responsibility for the attacks. However, hardlines recently may be indicating the attack came from somewhere else:
“INITIAL INDICATIONS SHOW THAT ATTACK DIDN’T COME FROM YEMEN, AND WEAPONS ARE IRANIANS” – SAUDI-LED COALITION SPOKESMAN
The Norges Bank is set to meet on Thursday this week. Expectations are for a 25bps hike to 1.50%. As Norway will now be contributing more crude to the world economy, the language in the monetary policy statement will be important to watch. This meeting may be the catalyst to move USD/NOK out of the range.
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