EUR/NOK Outlook: Bearish, as the rate is below its recent average and near recent lows, pressured by the weak euro and falling oil prices.
Key drivers:
• Rate gap: The European Central Bank's neutral monetary policy stance contrasts with Norges Bank's hawkish position, supporting the krone against the euro.
• Risk/commodities: The recent drop in oil prices, currently above the three-month average, negatively impacts the krone's value due to lower energy revenues.
• One macro factor: Eurozone inflation is expected to decrease, suggesting slower economic growth, which may weaken the euro further.
Range: EUR/NOK is likely to hold near recent lows within its stable range, with little movement expected until new data emerges.
What could change it:
• Upside risk: Renewed strength in oil prices could support the krone, enhancing its appeal versus the euro.
• Downside risk: A significant deterioration in Eurozone economic data could lead to a further decline in the euro’s value.
