Two of the largest moves we have seen over the past 2 weeks have been the strong bid in the US Dollar and the dramatic fall in the price of crude oil. So, what happens to a country ‘s currency (vs the USD) that relies on oil and gas for 40% of its export revenue and 20% of its GDP? It falls 30% in less than 2 weeks!
On March 9th, the day after Saudi Arabia said it would counter Russia’s refusal to cut supply by pumping its own oil as much as possible, the Norwegian Krone stood near 9.2500. Today, less than 2 weeks later, the pair reached a high of 12.1224. Nearly halfway through the move, the Norges Bank held an emergency meeting and cut interest rates from 1.5% to 1.0%. However, this action failed to halt the move higher and it continued this week. Today, the Norges Bank said it would consider intervening in the market and buying the Krone to slow the devaluation. The Norges Bank has not intervened in the market since 1999. The Central Bank also said they would offer loans for up to 12 months to help those affected by the coronavirus. As a result, after putting in today’s highs, USD/NOK retraced on the day and ended up putting in a LARGE shooting star candlestick formation. A shooting star is a one candle formation indicating a possible reversal. Resistance isn’t until today’s highs near 12.1225 and first support isn’t until yesterday’s lows near 10.5000.
Source: Tradingview, FOREX.com
USD/NOK isn’t the only Norwegian Krone pair to reverse today. The result of the Norges Bank comments also had a reversal effect on the EUR/NOK after a 20% run up during the same timeframe. Resistance again is at today’s highs near 13.1492. Horizontal support is near 11.5980, then yesterday’s lows at 11.5072. The pair also put in a huge shooting star formation.
Source: Tradingview, FOREX.com
Note that towards the end of the Crude Oil Futures trading session, US President Trump hinted that the US may intervene and buy oil for the Strategic Petroleum Reserve (SPR). This helped Crude Oil’s rally of 25% today, however most of the move was during the US session, and well after the Norges Bank comments. But this did help reinforce a lower USD/NOK.
Source: Tradingview, NYMEX, FOREX.com
When it comes to trading the Norwegian Krone, there are at least 3 factors we need to pay close attention to:
1. The direction and the magnitude of the price of the US Dollar
2. The direction and the magnitude of the price of Crude Oil
3. Comments from Norges Bank officials
These are all currently driving the price of USD/NOK and EUR/NOK. A change in any one of them could result in a change in direction of the Norwegian Krone.
Any reviews, news, research, analysis, prices or other information contained on this website is provided as general market commentary, does not constitute investment advice and may undergo changes from time to time. Trading the Financial and Currency Markets on margin carries a high level of risk and may not be suitable for all investors. The high degree of leverage can work against you as well as to your favor. Before entering trading Financial and Currency Markets, you should carefully consider your investment objectives, level of experience and risk appetite. There is a possibility that you could sustain a loss of some or more of your initial investment and therefore you should not invest money which you cannot afford to lose. You should be aware of all the risks associated with Financial and Currency Markets trading, and in case you have any doubt, rather seek advice from an independent financial advisor. FOREXANALYTIX LLC, its owners, employees, agents or affiliates do not give investment advice, therefore FOREXANALYTIX LLC assumes no liability for any loss or damage, including without limitation to, any loss of profit, which may be suffered directly or indirectly from use of or reliance on such information. We strongly encourage consultation with a licensed representative or financial advisor regarding any particular investment or use of any investment strategy. As part of our service we provide “Patterns in Play” (abbreviated as “P.I.P.’s”). These PiPs are derived from certain clearly defined patterns that the team members identify from their analysis. Each PiP is indicated with its corresponding theoretical entry, target and invalidation levels. Please note that these are not trade recommendations; they are simply our team’s interpretation of these patterns and their theoretical levels. Any information or material contained on this website including, but not limited to, its design, layout, look, appearance and graphics is owned by or licensed to FOREXANALYTIX LLC. Reproduction is prohibited without FOREX ANALYTIX LLC prior license in writing.
Recommended Content
Editors’ Picks
EUR/USD tumbles to 2024 lows near 1.0460
The US Dollar gathers extra pace and weigh on the risk complex, sending EUR/USD to new YTD lows near the 1.0460 region as the NA draws to a close on Thursday.
GBP/USD dips to multi-month lows around 1.2570
Further losses now motivate GBP/USD to revisit the vicinty of the 1.2570 zone for the first time since early May, always on the back of the strong move higher in the Greenback.
Gold faces extra upside near term
Gold extends its bullish momentum further above $2,660 on Thursday. XAU/USD rises for the fourth straight day, sponsored by geopolitical risks stemming from the worsening Russia-Ukraine war. Markets await comments from Fed policymakers.
BTC hits an all-time high above $97,850, inches away from the $100K mark
Bitcoin hit a new all-time high of $97,852 on Thursday, and the technical outlook suggests a possible continuation of the rally to $100,000. BTC futures have surged past the $100,000 price mark on Deribit, and Lookonchain data shows whales are accumulating.
A new horizon: The economic outlook in a new leadership and policy era
The economic aftershocks of the COVID pandemic, which have dominated the economic landscape over the past few years, are steadily dissipating. These pandemic-induced economic effects are set to be largely supplanted by economic policy changes that are on the horizon in the United States.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.