The US dollar continues its upward trend against the Norwegian krone, reaching 11.1946 yesterday, the highest level since November 10, 2023. The USD/NOK pair has risen by about 8% since the low of September 25, 2023, when it was 10.3831, reaching the peak recorded yesterday at 11.1946. It has also risen by approximately 10% since the beginning of the year.
Recent Norwegian economic data shows signs of weakness in the Norwegian economy, including:
- A year-on-year decline in the Consumer Price Index (CPI) for October, which registered a growth of 2.6%, lower than the previous reading of 3.0%.
- A year-on-year decline in the Producer Price Index (PPI) for October, registering a contraction of 3.5%, lower than the previous reading of -2.9%, marking the lowest level since April 2024.
- Retail sales declined by 0.3% month-on-month in September, which is lower than the previous reading of 0.1%.
The Norwegian central bank kept interest rates unchanged at 4.50% in its meeting on November 7, 2024, in line with market expectations. This marks the seventh consecutive rate hold this year.
It is worth noting that several factors have contributed to the upward momentum of the USD/NOK pair. These include the election of Donald Trump to the US presidency, particularly with his pledge to reduce corporate taxes and impose tariffs on imports, which could fuel US inflation and strengthen the US dollar against most foreign currencies. Additionally, the markets have reduced their expectations for future cuts in US interest rates.
From a technical perspective, the Relative Strength Index (RSI) is currently at 63, indicating positive momentum for the USD/NOK pair.
The Positive Directional Indicator (DMI+) is around 22 points, compared to the Negative Directional Indicator (DMI-) at approximately 7 points. The large gap between these two indicators suggests strong buying pressure on the US dollar against the Norwegian krone. Most importantly, the Average Directional Index (ADX) stands at around 40, indicating strong momentum in this upward trend.
Regarding the MACD analysis, we observe a bullish crossover between the blue MACD line and the orange SIGNAL line within the positive territory for the past two days, indicating continued upward momentum for the USD/NOK pair.
Please note that this analysis is provided for informational purposes only and should not be considered as investment advice. All trading involves risk.
