EUR/NOK to come below 10.00 already before summer – Nordea

EUR/NOK currently trades around 10.21, after moving in the interval 10.21 to 10.30 last week. Economists at Nordea still remain optimistic that there is more downside in the pair from the current level, both in the short term and longer out. 

Key quotes

“10.20 is obviously a solid support level and a psychological barrier for market participants, but there have been many such barriers on EUR/NOK’s way down which have ultimately been crossed.”

“An oil price at $63/barrel implies EUR/NOK around 10.00 according to our simple model. If oil prices hold their ground, as we expect, we should at least get to 10.10 in the near-term. If market sentiment for some reason should sour, we see resistance on the upside at 10.40.”

“Longer out, higher oil and other commodity prices down the road will drive EUR/NOK lower. The same can be said for Norges Bank going into hiking mode, a journey on which we believe they will embark later this year. If anything, EUR/NOK could come below 10.00 sooner than we expected, not in the second half of 2021 but already during H1 if the oil price rally continues (the outlook is that it will) and Norges Bank becomes more hawkish (something we expect in March).”