The Norges Bank left its key interest rate unchanged at 0.00%, choosing to provide forward guidance of a possible rate hike down the road in 2021 amid signs of continuing economic recovery.
The Norges Bank, in providing forward guidance, says that the present assessment of the economic outlook and balance of risks could lead to the policy rate most likely being raised “in the latter half of 2021”.
The Norges Bank cut interest rates thrice in 2020 to the present record low as it acted in synchrony with other central banks to try to stem the negative impact of the coronavirus on the local economy.
With today’s decision, the Krone is under pressure against the USD, which sees overnight weakness gradually being rolled away by strengthening yields on the 10-year bonds. The Krone is also being pressured by a further dip in crude oil prices.
Technical Levels to Watch
The price pattern on the daily chart of the USD/NOK continues to trade in the consolidation range that forms the rectangle. Price has bounced off the lower edge of the rectangle with today’s decision and has hit resistance at the 8.48719/8.51744 zone. A price advance that clears this area targets 8.65723, with 8.80393 staying relevant to the attempts by the USD/NOK to stage a bullish recovery.
On the other hand. bears would need to see a breakdown the rectangle’s lower border for the downtrend to continue. This leaves 8.29611 and 8.18807 as potential multi-year targets to the downside.