The USDNOK is trading lower as the government of Norway has taken steps to ease some of the restrictions it placed due to the coronavirus pandemic.
A reopening of immigration services is in the works. This move is one of several steps to get economic activity in Norway going again and is boosting investor confidence in the Norwegian Krone. Some weeks back, the Norwegian government announced data to show it had contained the coronavirus outbreak in the country. The latest news has given some fillip to the Norwegian Krone, enabling it to gain 0.72% on the US Dollar in today’s trading session.
However, concerns still exist that the Norwegian Krone’s advance could be limited by falling crude oil prices, which have so far failed to get any significant traction from OPEC + production cuts.
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Technical Outlook for USDNOK
The USDNOK has continued on its pullback run from the peaks of price attained on March 19 and 20. The pair has now found support at the 61.8% Fibonacci retracement level from the swing low of March 9 to the swing high of March 19, 2020. The stall at this retracement level correlates with the drop in crude oil price after a transient rally seen this week following the OPEC + agreement to cut production by 10 million barrels per day. However, crude oil prices on both the Brent and WTI benchmarks have resumed their downward slide, which is likely to limit further gains of the commodity-linked Norwegian Krone against the US Dollar.
Immediate resistance as defined above comes in at 10.32158. A breakdown of this level requires some form of support from crude oil price advance, and this move would then be able to target the next support at 10.22343 (March 17 and April 3 lows), with 10.16091 (April 10/13 lows) lurking nearby for any further price slips.
On the flip side, a bounce at the support level allows the USDNOK to resume its uptrend, which has the 10.65769 price level (50% Fibonacci retracement) as an immediate target. The prior low of March 10 and the price peak of March 26 form the next upside target at 10.79390. The possibility of attaining this price level could be enhanced if the Norwegian Krone is exposed to further declines in crude oil price.
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