The USDNOK continues to remain under pressure as a result of the stellar performance of the Norwegian Krone and underperformance of the greenback. A lot of the NOK’s strength this month has been crude oil-related.
Today, the Norwegian Petroleum Directorate reports that Norway’s crude oil output dropped to 1.54 million barrels per day (a 12% drop), which was more than the 7.9% drop which was on the forecast. This drop represents a shortfall below the government’s official production cap. However, a ramp-up in production from new oilfields has contributed to a 45% rise in production output for 2020, enabling the country to get more crude oil revenue to compensate for falling crude oil prices.
The NOK has strengthened nearly 30% against the USD since March 2020. The USDNOK has fallen from a peak of 12.12240 on 19 March to 9.28612 presently. A lot of this movement occurred in May and June as 9.7 million barrels per day production curbs by the OPEC + alliance allowed oil prices on Brent crude gain nearly 100%.
Technical Outlook for USDNOK
The USDNOK is approaching the 9.22531 support, formed by previous lows at 12 February, 6 March and 10 June 2020. A breakdown of this support opens the door towards the 8.80398. The chances of this move occurring will be enhanced by further weakening of the greenback overall.
On the flip side, a fall in crude oil prices may exert pressure on the Norwegian Krone, now that the OPEC + alliance has rolled back some of the production curbs to the tune of 2 million barrels per day. This scenario could allow for a bounce on the USDNOK, targeting 9.48835. Further advance on the pair allows for a push towards 9.80889, with 10.13330 coming into play if the price advance gains momentum.