USDNOK remains unfazed after Norges Bank surprised markets with 25 basis points cut to 0%. The Monetary Policy and Financial Stability Committee of Norges Bank have unanimously decided to reduce the policy rate.
The uncertainty around the coronavirus lockdown and low crude oil prices forced the central bank to reduce the interest rates to zero in an attempt to offset the coronavirus downturn. Business activity in Norway has fallen dramatically amid the coronavirus outbreak, while crude oil prices at historic lows put extra pressure to the economy which heavily relies on crude oil production and exports.
Norges Bank Governor Øystein Olsen said: “In the Committee’s current assessment of the economy’s outlook and balance of risks, the policy rate will most likely remain at today’s level for some time ahead. We do not envisage making further policy rate cuts”. He added that it is possible to set negative interest rates, but we do not expect to cut below 0%.
Norges Bank cut the interest rates in March from 1.5% to 0.25% amid the coronavirus outbreak.
On the upside, the first resistance stands at 10.3408 the daily top. A close above that level might challenge 10.4793 the high from May’s trading session. A break above 10.4793 might target 10.6514 the high from April 27.
On the flip side, initial support for USDNOK will be met at 10.2043 the daily lows. If the USDNOK pair breaks below, the next support zone is at 10.1195 the low from April 7 trading session. Next support level to watch on the downside is at 9.9996 the low from March 16.