Upbeat economic data from Norway has helped the Norwegian Krone rally to 2-week highs this Monday, sending the USDNOK lower for the 6th straight session. House pricing data for September showed an annualized 5.8% spike above the levels for the same period last year, representing the largest increase in 3 years as the low-interest environment sparks a boom in the real estate sector. The seasonally adjusted monthly house price data revealed an increase of 1.3%.
Also adding to the Krone’s strong performance on the day was the 4% rise in crude oil prices, as well as the weakening of the US Dollar as US President Donald Trump remains in hospital following his coronavirus infection. Brent crude oil prices were up by 5.06% at the time of writing, checkmating two sessions of losses and supporting the oil-dependent Norwegian currency on the day.
The USDNOK is currently trading at 9.23020, or 0.6% lower on the day.
Technical Outlook for USDNOK
The pair is now challenging support at 9.22531 (10 June low and 27 July high) as the pair seeks to re-establish the downtrend. A breakdown of this price level could send the pair towards the 9.04414 support level (11 October 2019 and 30 July 2020 lows), with 8.80393 constituting a potential target below this area. The previous neckline of the inverse head and shoulders pattern, which is an extension of the ascending support trendline that connected previous lows of July 2019, January 2020 and July 2020, may serve as a pitstop between 9.22531 and 9.04414.
On the flip side, recovery depends on a weakening of crude oil prices or strengthening of the US Dollar, which could occur if US President Donald Trump is released from the hospital earlier than expected. This bounce could target 9.48835 as the initial upside target, with 9.80889 and 10.13330 lining up as potential targets to the north.