The USDNOK retreated slightly from its record highs following the decision of the Norwegian central bank to cut interest rates, following examples of other central banks across the world. The Norges Bank delivered a 75 bps interest rate cut, sending the policy rate to a record low of 0.25% in an unscheduled emergency meeting today. This is the 2nd such cut delivered in a week, with last week’s 50bps interest rate cut being the first time the Norges Bank was cutting rates in 4 years.
This enabled the Norwegian Krone to gain some strength, having been on the back foot for the past three weeks on the back of falling crude oil prices. Prior to today’s price move, the USDNOK had exceeded the 12.000 mark to set a new record high price level of 12.1224, representing a nearly 20% gain in what has been an extraordinary week for this pair.
Today’s decision has allowed the USDNOK to pullback towards the 11.84693 price level, even though price bias for the day has favoured the bulls on the pair.
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Technical Outlook for USDNOK
With no historical price to make reference to in terms of possible resistance areas, we have to look towards the indicators to show the way. The RSI is starting to show divergence from the price highs on the daily chart. The 4-hour chart shows that price had retraced to the 50% Fibonacci retracement (10.7995) of a trace from the swing low of 10 March 2020 to yesterday’s swing high.
I expect the immediate resistance to be registered at the 23.6% Fibonacci price level of 11.4641, which corresponds to the high of 18 March and the close of 19 March 2020. Below this level, today’s intraday low at 10.7995 could serve as the next downside target.
On the flip side, price could retest yesterday’s high and even surpass it if the prevailing strength in the USD and weakness in the crude oil markets persist.
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