USD/NOK Forecast After the Second Norges Bank Hike
The USD/NOK price dropped to the lowest level since August 17 as investors reacted to the latest interest rate decision by Norges Bank. It dropped to a low of 9.6456, which was lower than this week’s high of 9.7668.
Norges Bank and FOMC minutes
The USD to NOK exchange rate declined slightly after Norway’s central bank decided to hike interest rate for the second time this year. The bank hiked rates by 0.50%, bringing the main rate to 1.75%. It made a similar hike in its June meeting.
In a statement, the bank said that interest rate hike was necessary to deal with the rising inflation in the country. Data published recently showed that inflation surged to 4.5% in July from the previous 3.6%. As a result, the bank believes that inflation will keep rising and then start dropping in the coming months.
Norway’s inflation is a bit lower than in most countries because of the country’s abundant oil and gas. This is unlike other EU members that rely on imports. The statement said:
“The rise in prices has been broad-based in recent months and may entail that inflation will remain high for longer than expected. There is a risk that little spare capacity in the Norwegian economy and persistent global price pressures will lead to a further acceleration in price inflation.”
The USD/NOK also reacted to the latest data and events from the United States. On Wednesday, data from the country revealed that retail sales did relatively well in July as inflation eased slightly. Shortly afterwards, the US Federal Reserve published relatively dovish minutes.
Fed officials said that higher interest rates were needed to help slow the soaring inflation. At the same time, many members warned that the bank should now take it slow as it monitors the impact of the recent rate hikes.
The four-hour chart shows that the USD to NOK exchange rate formed an ascending triple top pattern that is shown in green. In price action analysis, this pattern is usually a bearish sign. It managed to move below the 25-day and 50-day moving averages while the RSI is pointing downwards.
The pair will likely continue falling as sellers target the next key support level at 9.5900. A move above the resistance at 9.69 will invalidate the bearish view.