Bias: The outlook for USD/NOK is range-bound, as it is near the 90-day average and within the middle of the 3-month range.
Key drivers:
• Rate gap: The Federal Reserve's potential shift toward rate cuts contrasts with Norges Bank’s hawkish stance, which keeps interest rates steady at a higher level.
• Risk/commodities: Oil is trading above its 3-month average and showing volatility, which influences the Norwegian Krone given its reliance on oil exports.
• One macro factor: Geopolitical tensions following U.S. actions in Venezuela could lead to short-term fluctuations in USD demand.
Range: The USD/NOK pair is likely to hold within its recent range, reflecting current market stability.
What could change it:
• Upside risk: Any unexpected signals from Federal Reserve officials indicating a delay in rate cuts could boost the USD.
• Downside risk: Continued weakness in oil prices or a dovish Fed tone could lead to a decline in the USD relative to the NOK.
