Rabobank sees EUR/NOK trading near 11.00 for 1-3 months as markets price only 17 bps of further tightening.
Norwegian inflation data has reduced expectations for additional Norges Bank rate hikes after May’s 25 bps increase to 4.25%. Markets now price just 17 bps of tightening over the next six months, down from earlier forecasts.
The Norwegian Krone remains one of the top-performing G10 currencies this year, up 6.85% against the EUR. However, June’s softer CPI print has led to a reassessment of policy tightening prospects, tempering NOK strength.
Rabobank expects EUR/NOK to hold near 11.00 in the 1-3 month horizon before declining over six months, citing choppy range trading ahead.