According to Mikael Milhoj, Senior Analyst at Danske Bank, both crosses are expected to stay sidelined in the upcoming weeks.
“In the Scandies, yesterday’s session saw EUR/NOK drop to a weekly low. At first sight, the move seemed a little strange. Not only did the NOK appreciation coincide with a drop in the oil price but the fiscal budget in Norway also proved slightly less expansionary than what some had expected (yet still in line with Norges Bank’s forecast)”.
“We think the reason for the sudden move lower in EUR/NOK, primarily lied in NOK/SEK buying and stops taken out post the Swedish inflation release that fell short of expectations”.
“Going forward we regard both EUR/NOK and EUR/SEK as range plays in the weeks to come. Our fundamental predisposition remains to sell EUR/SEK on spikes towards 9.65 and enter a bullish EUR/NOK position as a way to position for a weaker NOK going into year-end”.
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