EUR/NOK is now trading around 9.70 after reaching a record low at 9.65 for the first time since 2019. While economists at Nordea cannot exclude the possibility of a stronger krone if oil prices keep climbing, they still believe that the risk is to the upside in EUR/NOK.

Upside risks in EUR/NOK

“We believe that the central bank will reduce the NOK purchases to around 300-400m/day in November, as a result of the 2022 budget proposal. The reduction of NOK purchases from Norges Bank means less tailwinds for NOK from November onward. But until then, NOK could continue to go stronger with the buying flow from petroleum companies and Norges Bank.”

“The uncanny low RSI suggests that EUR/NOK will either consolidate or move higher in the upcoming period. But with the moves we have seen lately, it's hard to be sure when this strong downward trend in EUR/NOK will be put off course.”

“In the short-term, oil prices could rise above $90/barrel according to the global EIA’s oil storage outlook. If oil prices continue to rise, we could see EUR/NOK approaching 9.50-9.60.”