Norwegian Krone: Supported against Euro as NOK flows increase – Nordea

FXStreet Insights Team FXStreet

Nordea’s Senior Macro and FX Strategist Sara Midtgaard notes that the Norwegian Krone (NOK) weakened in June, with EUR/NOK peaking near 11.35, but now sees limited further upside. She expects EUR/NOK to move back towards 11.00 by end-July, supported by larger daily NOK purchases from Norges Bank, potentially higher Brent crude prices, and an August rate hike, while US data and equity market weakness remain key risks.

NOK support from flows and oil

"With the exchange rate now having reached 11.35, we believe the balance of risks has shifted, and now see scope for a stronger NOK during July."

"We now believe further upside is limited and expect the pair to move back towards 11.00 by the end of July."

"We also expect Norges Bank to raise its policy rate in August, while markets currently assign only around a 60% probability to another hike."

"We therefore see scope for EUR/NOK to move back towards 11.00 over the coming weeks, although stronger-than-expected US data and weaker global equity markets remain the main near-term risks to this view."

"Under such a scenario, EUR/NOK could fall back towards the 11.00 level."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)

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