EUR/NOK advances to 2020 highs beyond 10.000

The selling bias in the Norwegian currency is now lifting EUR/NOK back above the psychological mark at 10.00 the figure on Monday.

EUR/NOK offered on oil weakness

NOK is deriving increasing selling pressure at the beginning of the week in response to the unremitting sell-off in crude oil prices, which has so far dragged the barrel of European reference Brent crude to sub-$59.00 levels, or new 3-month lows.

The ongoing weakness around the krone has been exposed further after the Norges Bank left the policy rate unchanged at last week’s meeting. The Scandinavian central bank kept the neutral tone in its statement, although it highlighted the probability that the economy could be nearing a peak.

Moving forward, the docket in the Nordic economy includes Retail Sales, the unemployment rate and Norges Bank’s Currency Purchase figures and Credit Indicator.

What to look for around NOK

The Norwegian Krone remains on the defensive so far in January and after hitting fresh tops around 9.81 vs. the single currency at the beginning of the new year. Brent dynamics and the broader risk appetite trends remain a key driver for the currency, while market participants have already priced in the strong fundamentals of the Scandinavian economy, which according to the latest Norges Bank meeting, it should be close to a cycle top. In fact, and following last week’s meeting, the Norges Bank is now expected to keep the policy rate unchanged in the near term at 1.50% amidst further signs of stabilization in the economic growth and inflation.

EUR/NOK significant levels

As of writing the cross is gaining 0.72% at 10.0397 and faces the next up barrier at 10.0449 (2020 high Jan.27) seconded by 10.1134 (78.6% Fibo of the December-January 2019 drop) and then 10.2131 (monthly high Dec.4 2019). On the flip side, a breach of 9.9207 (low Jan.24) would expose 9.8989 (200-day SMA) and finally 9.8154 (2020 low Jan.7).