The USD/NOK pair is currently trading with slight losses around 10.85, as the Federal Reserve’s hawkish stance continues to support the USD. Despite strong economic recovery signals in Norway, the impact on the NOK remains limited. With the American calendar empty for now, all eyes are on next week’s US CPI report, which is expected to set the pace for the pair’s movement.
Norway’s April CPI readings showed a slight increase in the headline number to 3.6% year-on-year, slightly lower than expected but still higher than the previous month. The underlying inflation rate exceeded expectations, coming in at 4.4% year-on-year, indicating a strong inflationary pressure in the country. The Norges Bank decided to maintain rates at 4.5% last week and hinted at the possibility of a prolonged period of tight monetary policy, with markets anticipating only a 50 bps easing in the next year.
On the US front, the Fed officials are maintaining their hawkish bets, with investors postponing expectations for the easing cycle to begin in September. The USD/NOK pair’s daily RSI remains in negative territory, suggesting a bearish short-term outlook. The MACD histogram also indicates increasing negative momentum, with sellers gaining a stronger position in the market.
Despite the bearish short-term view, the USD/NOK pair remains above the key SMAs (20, 100, and 200-day) on the chart, indicating a bullish long-term trend. Traders should be cautious of potential pullbacks and monitor market trends closely for buying opportunities. In conclusion, while short-term indicators point to bearish pressure, the overall outlook remains bullish for the USD/NOK pair, with the need for vigilance due to possible market volatility.
