USD/NOK Outlook: The outlook is slightly weaker, but likely to move sideways, as the rate is below its recent average and near recent lows with limited clear drivers.
Key drivers:
• Rate gap: The Federal Reserve's potential rate cuts suggest a softer approach to U.S. monetary policy compared to Norges Bank's steady stance at 4.5%.
• Risk/commodities: Oil prices are currently above average, supporting the krone as Norway is a major oil exporter, although volatility could create uncertainties for both currencies.
• One macro factor: Ongoing geopolitical tensions following U.S. airstrikes in Venezuela may impact the dollar's performance as markets adjust to U.S. policies.
Range: Movement in the USD/NOK is likely to hold steady within the recent range, characterized by low volatility.
What could change it:
• Upside risk: A stronger-than-expected U.S. labor market report could boost the dollar.
• Downside risk: Further tariff threats or geopolitical tensions could weaken the dollar further, putting additional pressure on the USD/NOK rate.
