EUR/NOK - from a longer-term perspective (several weeks) is an interesting short. While from a technical standpoint it is a bit extended to the downside, it is nothing that is too serious. Where this cross makes for an interesting story is from the macro viewpoint.
Given the markets focus on interest rate differentials (i.e. carry), NOK is poised to offer a better yield relative to EUR in the weeks ahead. With rates currently at 4% and the central bank (Norges Bank) ready to hike in 25 bp intervals, rates at 5% by year end are not out of the question.
Higher oil prices will also benefit NOK as Norway is the world's third largest oil exporter.
So while the charts currently are somewhat neutral to modestly EUR bullish, this is a cross we need to monitor for shorting opportunities.
Target price: 8.03 & 7.92
Given the markets focus on interest rate differentials (i.e. carry), NOK is poised to offer a better yield relative to EUR in the weeks ahead. With rates currently at 4% and the central bank (Norges Bank) ready to hike in 25 bp intervals, rates at 5% by year end are not out of the question.
Higher oil prices will also benefit NOK as Norway is the world's third largest oil exporter.
So while the charts currently are somewhat neutral to modestly EUR bullish, this is a cross we need to monitor for shorting opportunities.
Target price: 8.03 & 7.92
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