USD/NOK Outlook: Bearish, as the rate is below its recent average and near recent lows, pressured by a lack of strong upward drivers.
Key drivers:
- The Federal Reserve plans to implement rate cuts in 2026, which may weigh on the dollar's strength against the krone.
- Oil prices are currently above their recent average, which could benefit the krone as Norway is a significant oil exporter.
- Norges Bank's decision to maintain a higher policy rate supports the krone's value, contrasting the Fed's easing direction.
Range: The USD/NOK is likely to drift within its recent range, affected by ongoing geopolitical tensions and mixed economic data.
What could change it:
- Upside risk: Any surprise in US labor market data that strengthens the dollar could shift sentiment.
- Downside risk: Continued weakness in oil prices, combined with a dovish Fed outlook, could further weaken the USD.
