USD/NOK Forecast as Norwegian Inflation Surges
The USD/NOK price was hovering near the highest level in March 2020 as investors reacted to the latest Norwegian consumer price index (CPI) data. It rose to a high of 11, meaning that it has risen by more than 31% from its lowest level in 2021.
Norwegian inflation rising
Norway’s inflation continued to rise in September of this year. According to the statistics agency, the headline consumer inflation rose from 6.5% in August to 6.9% in September. This increase was much higher than the median estimate of 6.2%. On a month-on-month basis, inflation rose from -0.2% in August to 1.4% in September.
Meanwhile, core inflation, which excludes the volatile food and energy products, increased from -0.5% to 1.0% on an MoM basis. It then rose from 4.7% to 5.3% on an annual basis. These were the highest numbers in decades.
As a result, the USD/NOK pair pulled back slightly as investors predicted that the Norges Bank will continue hiking interest rates in the coming months. In September, the bank decided to 2.25% and hinted that it will continue hiking in the coming months.
Policymakers warned that inflation had broadened in recent months. Therefore, analysts expect that the bank will hike interest rates by either 0.50% or 0.75% in the final meetings of the year.
The USD/NOK price has done well because of the broad US dollar rally. The greenback has rallied by more than 20% and is currently trading at the highest level in more than 20 years. Focus now shifts to the upcoming US inflation data.
The daily chart shows that the USD/NOK price has been in a strong bullish trend in the past few months. As a result, it has managed to move above the 25-day and 50-day moving averages. It also crossed the important resistance level at 10.35, which was the highest level on July 14. The Relative Strength Index (RSI) has pointed downwards. Therefore, the pair will likely continue rising as bulls target the next key resistance level at 11.50. Learn more about how to send money to Norway here.