Economists at Danske Bank still favour a break of 12.00 in EUR/NOK during 2024.
More NOK strength on the cards for the very near-term
The outlook for easier monetary conditions, higher short-end NOK rates alongside lower fiscal NOK sales is likely to act as a near-term boost to NOK. That said, we still think the downside potential remains limited and we still favour the topside in EUR/NOK as we enter 2024.
Relative rates are likely to remain a strategic supportive factor for the cross as NB cuts policy rates earlier and by more than the ECB. Also, we still believe weaker growth and contractionary global monetary conditions (albeit easier than previously) ultimately will mark a headwind for cyclically sensitive currencies incl. NOK.
We think NOK is fundamentally undervalued but we do not see the trigger for a turnaround in the next 12M.
Forecast: 11.50 (1M), 11.70 (3M), 12.10 (6M), 12.10 (12M)
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