EUR/NOK tumbles to fresh 3-week lows near 9.75 post-CPI
- The cross loses further ground and tests the 9.75 area.
- Inflation in Norway rose more than expected in December.
- NOK keeps following Brent-dynamics as a main driver.
The Norwegian Krone is extending its rally so far in the second half of the week and is dragging EUR/NOK to the area of multi-week lows near 9.7500.
EUR/NOK looks to Brent, up on CPI
The cross is losing ground for the fifth consecutive session on Thursday, coming down to test 3-week lows in the 9.7500 neighbourhood.
Despite crude oil prices are struggling for direction today, the recent rally sent the prices of the barrel of European reference Brent crude back to the $61.00 mark, helping NOK to regain composure after yearly lows beyond 10.50 seen in late December.
Also collaborating with today’s upside, headline inflation figures in the Scandinavian economy rose more than expected during December at an annualized 3.5% (vs. 3.4% forecasted), while coming in flat inter-month. In addition, consumer prices stripping food and energy costs also came in flat on a monthly basis and advanced 2.1% from a year earlier.
What to look for around NOK
NOK should continue to look to Brent dynamics as the main driver for the price action along with broader risk appetite trends. In fact, prospects of higher crude oil prices following the recently clinched deal to curb the output by the OPEC+ should sustain another leg higher in prices and thus favour extra appreciation in NOK. Additionally, the economy remains strong and expanding above trend, which support the view of another rate hike by the Norges Bank, most likely in March and September.
EUR/NOK significant levels
As of writing the cross is losing 0.11% at 9.7597 facing the next down barrier at 9.7527 (2019 low Jan.10) seconded by 9.7100 (55-day SMA) and then 9.6330 (monthly low Dec.4 2018). On the other hand, a break above 9.8533 (21-day SMA) would aim for 9.9600 (2019 high Jan.3) and finally 10.0572 (2018 high Dec.27).