EUR/NOK set to decline towards 9.50 over the summer – Nordea

A higher oil price and improved risk sentiment has brought EUR/NOK slightly below 10.00 again. While economists at Nordea do see more downside in the cross ahead, it is probably limited.

EUR/NOK is under 10.00 again

“EUR/NOK could fall a bit more in the short-term, but the downside is very limited. From a technical perspective, the current RSI of 35 implies we are close to the bottom for now, but EUR/NOK has a bit more to fall until RSI reaches 30 – a level that would indicate that NOK is overbought against the EUR. Overall, we see EURNOK trading in the range 9.95-10.15 in the short-term.”

“At some point the fall in EURNOK will take a break, and we would not be surprised if the cross moves up again. Since the meltdown in March last year, the whole way down has been characterised by EUR/NOK moving two steps down, one step up, etc. This will likely continue also ahead. But the overall direction towards the summer is lower.”

“The combination of higher oil prices and higher rates in Norway is why we hold our view for EUR/NOK coming further below 10.00 towards and over the summer. But the downside is restricted: EUR/NOK traded mostly in the range 9.50-10.00 during 2018/19 and we don’t expect to see much more downside than 9.50.”