USDNOK was trading higher in the last quarter of 2024, mainly driven by a strong USD after Trump won the US elections. However, after Trump took office, this dynamic reversed due to a "buy the rumor, sell the news" impact—similar to what we observed in 2016/2017, when the dollar also turned sharply lower in January following Trump's victory.
Looking at current price action on the USDNOK daily chart, the recent sharp decline appears impulsive, coming down from a new high. This strongly suggests that an important top could be in place near 11.50, opening the door for further weakness. Although there is some swing support at 10.38, it may only trigger a temporary fourth-wave rally, which in my opinion, could represent an attractive opportunity on the short side after a bounce back to the 10.60/10.80 area. The invalidation level for this bearish outlook is at 11.07.
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