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USD/NOK has fallen lately to around 8.30. NOK has strengthened in tandem with other risk-sensitive currencies while safe-havens like the USD have weakened. According to economists at Nordea, USD’s weakness will likely turn around and see very limited downside in USD/NOK ahead.

USD weaker, but will likely turn around

“From a technical perspective, the current RSI of 30 suggests that NOK is overbought against the USD and that USDNOK is very close to the bottom.”

“Looking forward, we are convinced that there is more upside for long US rates as the US economy is about to embark on a path of strong growth. Quick vaccination, ample fiscal stimulus and expansive monetary policy will give a strong rebound in the near future. This should be positive for the USD.”

“A continued strengthening of both NOK and USD is why we see a fairly stable USD/NOK ahead. If we were forced to lean in any direction, the USD could strengthen somewhat more than NOK due to the outperformance of the US economy. Anyhow, we see very limited downside in USD/NOK ahead.”