High oil and gas prices and improving risk sentiment have led to EUR/NOK trading below 9.50 for the first time since 2018. Economists at Nordea still see more downside in EUR/NOK until May/June. In their view, the cross could see 9.25, given that oil prices and risk sentiment do not worsen.

EUR/NOK could see 9.25 until Norges Bank starts selling NOK

“We still see more downside in EUR/NOK over the month or two so long as Norges Bank does not start selling ample amounts of NOK, which we don’t see happening before May/June. If we are right, the cross could see 9.25 before then.”

“Our view necessitates oil prices to hold their ground and risk sentiment not to worsen. The risk to this view is lower oil prices or Norges Bank starting to sell a lot of NOK from April 1 – which we don’t find very likely.”

“The window for NOK strengthening will close when Norges Bank eventually start selling a significant amount NOK. We see EUR/NOK turning higher (toward 10.00) when Norges Bank turns around.”