Even though the EUR/NOK has rallied in the last few weeks as a result of falling oil prices, Nordea Bank has predicted that the pair would hit a price target of 9.75 by the end of 2021.
Economists at Nordea Bank base their price prediction on a recovery of the NIBOR as from the summer months.
The recovery in the EUR/NOK is due to the Krone being pressured by lower Norwegian Interbank Offered Rates (NIBOR). According to Nordea bank, better structural liquidity in the NOK market is keeping the NOK’s value in check. This situation could last another month before tightening resumes in July, pushing NIBOR higher.
Furthermore, the Norges Bank may resume rate hikes in the September meeting, pushing NIBOR even higher. This will provide tailwinds for the Krone, sending the EUR/NOK lower. Somewhat higher crude oil prices could provide the additional force behind the downside move. 10.10 is the first barrier to this move, while 10.25 remains the ceiling.
Technical Levels to Watch
The price broke out of the channel’s upper border but has quickly met resistance at the 10.20324 resistance. Currently, the price is ranging between 10.14502 and 10.20324. A break to the upside targets 10.29497, with 10.44506 serving as an additional target.
On the flip side, a breakdown of the 10.14502 support allows the downtrend to continue towards the 10.01146 support. 9.89889 and 9.83219 serve as additional targets to the south.