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  • The Krone  gathers pace to the 9.6000 region vs. EUR.
  • The Norges Bank raised rates by 25 bps to 1.0%.
  • The cross plummets to fresh 4-month lows near 9.6000.

The Norwegian Krone is trading sharply higher vs. its European peer on Wednesday, dragging EUR/NOK to fresh multi-month lows in the vicinity of the 9.6000 handle.

EUR/NOK in 4-month lows

NOK picked up extra pace and clinched fresh 2019 highs vs. the shared currency after the Norges Bank raised its key rate by 25 bps to 1.0%, matching the broad consensus.

The Scandinavian central bank once again demonstrated it is the most hawkish member of the G10 select club. The bank reiterated the economy is running on a solid pace and capacity utilization is above normal levels, while inflation keeps navigating above the bank’s target.

Furthermore, the Norges Bank signaled rates could be increased further in the second half of the current year.

What to look for around NOK

The hawkish stance of the Norges Bank coupled with the solid fundamentals in the Nordic economy adds to the case for a stronger Krone in the months to come. This, in combination with the bullish prospects around the Brent crude favours extra downside in the cross. This scenario looks reinforced by this month’s Regional Network Survey, which stressed the growth outlook for the economy remains strong. In addition, the first quarter is usually NOK-positive reinforced by tighter conditions in structural liquidity.

EUR/NOK significant levels

As of writing the cross is losing 0.97% at 9.6025 and a break below 9.5533 (78.6% Fibo of the October-December rally) would aim for 9.5027 (monthly low Nov.8 2018) and finally 9.4161 (monthly low Oct.17 2018). On the other hand, the initial hurdle aligns at 9.7376 (55-day SMA) seconded by 9.8411 (high Feb.11) and then 9.8803 (high Mar.8).