Oil markets look very bullish, so it is possible that the Norwegian krone may put up a bit more of a fight against the greenback than some of the other currencies out there.
The US dollar rallied a bit on Wednesday against most currencies, including the Norwegian krone. The US dollar has bounced from essentially the 9.4 NOK level, which is also worth paying attention to due to the fact that the 50-day EMA sits just below there. When you look at the recent move, it is simply a pullback that has been a long time coming due to just how parabolic the rally had been before it.
It is also worth noting that there is a lot of noise just to the left on the chart, an area where I think we should see quite a bit of support based on previous order flow. If we can break above the high of the Wednesday candlestick, then it’s likely that the US dollar will go looking to reach the 9.6 NOK level. Breaking above there then opens up the possibility of a move back to the highs, which are near the 9.9 NOK level. Given enough time, would not surprise me at all to see the US dollar go to the 10.0 NOK level, but obviously, there is a lot of psychology with a level like that. If we can break above the 10.0 level, it’s likely that the market will continue to go much higher, but you should also keep in mind that the Norwegian krone is highly levered to the crude oil market, as Norway is a major holder.
On the downside, if we were to break down below the 9.2 NOK level, then the market will more likely than not challenge the 9.0 NOK level, where the 200-day EMA comes into the picture, so you need to pay close attention to that indicator as it is a major level that a lot of algorithmic and technical traders will pay attention to. Breaking below that level would put the US dollar into a bearish market, something that I would not think is likely to happen anytime soon, but it must be noted that oil markets look very bullish, so it is possible that the Norwegian krone may put up a bit more of a fight against the greenback than some of the other currencies out there. This has been seen in the Canadian dollar as of late, but it is also worth noting that the Bank of Canada is quite a bit more hawkish than the Norges Bank.