USD/NOK rises above key resistance after Norges rate decision

By: Crispus Nyaga
Crispus Nyaga
Crispus is an active trader, where he is followed and copied at He lives in Nairobi with his… read more.
on Jun 17, 2021
  • The USD/NOK rallied on Thursday after the latest Norges Bank rate decision.
  • The bank left interest rates unchanged and pointed to an autumn rate hike.
  • The decision came a day after the hawkish FOMC decision.

The USD/NOK pair rallied to the highest level since April after the latest Norges Bank interest rate decision. The pair rose to 8.5400, which was more than 4% above the lowest level this year. 

Norwegian krone chart
Norwegian krone chart

Norges Bank decision

The Norwegian central bank was one of the several banks to deliver its interest rate decision today. The others are banks from Switzerland, Brazil, and Turkey.

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In its decision on Thursday, members of the monetary policy committee decided to leave interest rates unchanged as it continued to provide support the economy. The bank said that the economy continues to power ahead as the government has accelerated its vaccination process. 

On inflation, Norges Bank noted that inflation has moved below the 2% target in the past month. It expects that it will remain below this level for the next few year because of the overall stronger krone. 

Meanwhile, on interest rates, the bank said that while low-interest rates are ideal in speeding the recovery process, they posed the risk of financial imbalances. It maintained that it will start tightening in the fourth quarter of the year.

The USD/NOK rally was also because of the Federal Reserve that delivered its decision on Wednesday. The bank decided to leave its pandemic response tools unchanged. Interest rates remained between 0% and 0.25% while the monthly pace of asset purchases will continue at $120 billion per month. However, the bank also tweaked its policy by hinting that it will start hiking interest rates in 2023. It will also start tapering its asset purchases later this year.

Looking ahead, the pair will react mildly to the latest US initial jobless claims numbers that will come out on Thursday. Analysts expect the data to show that initial claims declined from 379k to 359k while continuing claims fell from 3.499 million to 3.43 million.

USD/NOK technical analysis

USD/NOK technical chart

The daily chart shows that the USD/NOK pair popped today. It moved above the important resistance level at 8.400 where it had struggled to move above before. It also moved above the 25-day and 50-day exponential moving averages (EMA) while the MACD has kept rising, Therefore, after this bullish breakout, the pair may keep rising as bulls target the next key resistance at 8.800, which is about 4% above the current level.

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