- The USD/NOK advances modestly, showcasing 0.20% gains, gravitating around the 10.975 level.
- Markets are betting on sooner rate cuts by the Fed in May after November CPI.
- US bond yields dropped across the board.
During Tuesday's trading session, USD/NOK experienced gains, currently trading around the 10.975 level. Despite the pair holding strong, its upside potential may be limited as the markets are seeing sooner rather than later rate cuts by the Federal Reserve (Fed) after the release of inflation figures from the US.
November in the US saw predicted inflationary dips, as shown by the Consumer Price Index (CPI), which only rose a slight 0.1% monthly. Year-on-year inflation dropped marginally to 3.1% from 3.2% in October, with the core inflation figure, excluding volatile components, steady at 4% annually.
For Wednesday's Fed meeting, markets anticipate the bank will maintain the rates at 5.5%, but attention is set to economic and rate predictions to determine when the easing cycle will start. In the meantime, the bank authorities continued to stress that their decisions hinge on data, pointing out that they require more proof of an economic slowdown before rate cuts begin. For November and October, inflation decelerated while the labor market has yet to show signs of cooling down, which may be the only factor that makes the Fed not call a victory on inflation.
Ahead of the decision, the US Treasury yields are declining. The 2-year rate is currently at 4.71%, while the 5 and 10-year yields stand at 4.25% and 4.23%, respectively. This decrease in yields could add pressure on the USD and limit the upside for the USD/NOK.
USD/NOK levels to watch
The daily chart suggests that the pair has a bullish resonance with the Relative Strength Index (RSI), showing positive dynamics in the chart. The positive slope and positive territory of the indicator are indicative of a strong buying momentum, overpowering its selling counterpart. In addition, the Moving Average Convergence Divergence (MACD) corroborates this bullish indication as it prints rising green bars, signaling the buyers are getting the better of the sellers.
Exhibiting similar progression, the pair stands tall above the 20,100,200-day Simple Moving Averages (SMAs), which insinuates that bulls are firmly in command of the broader time horizon.
Support Levels: 10.900, 10.870, 10.800 (20-day SMA).
Resistance Levels: 11.015, 11.075, 11.105.
USD/NOK daily chart
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
AUD/USD hovers around 0.6750 amid cautious mood
AUD/USD is treading water near 0.6750 in Asian trading on Monday. The pair struggles amid a cautious market mood, as traders remain wary of the French elections. However, a subdued US Dollar cushions the Aussie's downside.
USD/JPY drops toward 160.00 as risk aversion seeps back
USD/JPY is falling toward 160.00 in the Asian session on Monday, having failed to sustain at higher levels. A softer risk tone and encouraging Japanese Labor Cash Earnings data lift the Yen, weighing negatively on the pair.
Gold price tumbles as PBoC’s keeps Gold buying on hold
Gold price attracts some sellers during the Asian session on Monday. The precious metal loses traction as the People’s Bank of China, the Chinese central bank kept Gold buying on hold for the second month in June, according to official data released on Sunday.
Fourth straight weekly loss for BTC/USD
BTC/USD remains entrenched in a corrective slide, bolstered by the Fed minutes emphasising reluctance to ease policy until confidence in the disinflation process is observed.
French election: It’s all over for Marine Le Pen, but the left weighs on the Euro
The deciding vote in the French Parliamentary elections closed this evening, and the exit poll suggests a shock result. The winning party is the left alliance, the popular front, which was pulled together to try and keep Le Pen’s far right National Rally party out of power.