The Norwegian krone has seen support over the past month on notably rising energy prices. Strategists at Danske Bank expect EUR/NOK to move slightly higher towards 10.00 on rising global recession risks but emphasise that 2022 ultimately could prove the turning point for NOK.

Spring risks are skewed to the topside

“Our models indicate that EUR/NOK is now overvalued and we cannot rule out a regime shift in terms of a year-long NOK rally eventually starting in 2022. Meanwhile, we think global recession risks will dominate in the coming months and we think spring risks are skewed to the topside – albeit uncertainty is high.”

“In light of the substantial rise in energy price we lower our profile but have the same trajectory. We forecast EUR/NOK at 9.80 in one month (from 10.10), 10.00 in three months (from 10.30), 10.00 in six months (10.40) and 10.00 in 12 motnhs (10.40).”