USD/NOK Outlook: Bearish, as the rate is below its recent average and near recent lows, pressured by multiple factors.
Key drivers:
- Rate gap: The Federal Reserve is expected to cut interest rates in 2026, contrasting with Norges Bank's hawkish hold at 4.5%, benefiting the krone's position.
- Risk/commodities: With oil prices significantly above their average, the Norwegian krone may stabilize as Norway is a major oil exporter.
- One macro factor: Concerns over U.S. government shutdowns and tariff threats are increasing uncertainty around the dollar and supporting the krone.
Range: The USD/NOK is likely to drift within its 3-month range, as the pressures currently favor a lower rate.
What could change it:
- Upside risk: A surprising improvement in U.S. labor data could bolster the dollar’s appeal.
- Downside risk: Continued geopolitical tensions or an unexpected government shutdown may further weaken the dollar.
