The recent USDNOK rally has seen the U.S. dollar fight back against the Norwegian Krone after the greenback registered steady losses since the mid-March panic selling. A big move into the U.S. dollar as a safe haven, coincided with the panic low spike in crude oil to negative territory and this saw the Krone slip to 12.00.
A steady recovery in oil and the large outbreak of cases in United States saw traders unwind their dollar bets and the pair saw a low on Tuesday this week of 8.657. The dollar has moved higher against most of the world’s currencies after ISM manufacturing data showed a strong pace of expansion and today’s NFP payrolls data has seen unemployment in the U.S. fall under the 10% level to 8.4%.
The dollar is now trying to get up off the canvas against the Krone and land some heavier blows and as oil runs out of steam with a drop near $40.00 today, there is a real chance that the dollar can do just that. Oil has been grinding higher in recent weeks and once the hurricane threat dissipated, the risk of selling grew as recent inventories builds and OPEC production gains were factored in.
The Norwegian economy is still in good shape relative to other developed nations with year-on-year GDP down -4.7% in the second quarter, whilst the unemployment rate is at 5.2%. The only problem is that the jobless number is going the opposite direction from the U.S. with June marking a fourth-consecutive gain. For the near-term, oil will call the shots for the USDNOK and if the dollar can continue its gains against the major currencies, we may see the pair test the level in the weeks to come.
USDNOK Technical Outlook
The USDNOK has tumbled slowly from the virus highs of 12.000 in mid-March. The latest low was 8.657, which was registered on Tuesday, just before the dollar began its rally against the world’s currencies. The chart shows that there is strong horizontal resistance at 9.243 and this was once a key support level in March and June of this year. The 50 moving average also sits there and if the greenback can get above that level then the 10.000 level will be possible. The previous lows will be the downside risk and traders who want some assistance on risk management should consider the Investing Cube Trading Coaching. More details are available here.
USDNOK Daily Chart