USD/NOK Inverted H&S Pattern Points to More Upside
The USD/NOK exchange rate continued soaring after a hawkish statement by Jerome Powell. In his statement, the Fed chair reiterated that the bank will continue hiking interest rates in the coming months in a bid to fight the soaring inflation.
Norway inflation data ahead
The USD/NOK price jumped to a high of 10.12, which was the highest level since July 18 of this year. This price was about 7% above the lowest level this year. Most of these gains happened because of the substantially strong US dollar. The closely watched dollar index rose to its highest level in more than 20 years.
The dollar strength is mostly because of the substantially hawkish Federal Reserve. In a statement on Thursday, Jerome Powell warned that the Fed will continue hiking interest rates in the coming months. This is notable since the Fed has already increased interest rates by 225 basis points this year. His statement was in line with what he said at the Jackson Hole Symposium in August.
The next key catalyst for the USD/NOK pair will be the upcoming Norwegian inflation data scheduled for Friday. Economists expect the data to show that the country’s inflation rose from 6.8% in July to 7.1% in August. If they are correct, it will be the highest inflation increase in decades. Core inflation, which excludes the volatile food and energy prices, is expected to have risen to 4.8%.
Therefore, Norges Bank will likely continue hiking interest rates in a bid to fight this inflation. It has already delivered several rate hikes this year.
The four-hour chart shows that the USD to NOK exchange rate has been in a strong bullish trend in the past few weeks. As it rose, it formed an inverted head and shoulders pattern and moved above the 25-day and 50-day moving averages. The Awesome Oscillator has also moved above the neutral point. Therefore, the pair will likely continue rising as bulls target the next key resistance level at 10.20. A drop below the support level at 10.0 will invalidate the bullish view. Here’s how to send money to Norway.