- The USD/NOK rose sharply today even after strong Norwegian inflation data.
- Consumer prices rose by 0.4% in November leading to an annual gain of 1.4%.
- The increase is because of the overall strong US dollar.
The USD/NOK rose by more than 1% today even after upbeat inflation data from Norway. The pair is trading at 8.5133, which is a few pips above Friday’s low of 8.3710.
Norway’s inflation rises
In its most recent interest rate decision, the Norges Bank committed to increasing interest rates earlier than predicted. It attributed this to the relatively strong economy.
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The inflation numbers released today could push the bank to move even earlier. According to the Norwegian Bureau of Statistics, the overall consumer price index in the country increased by 0.4% in November.
It had dropped by 0.4% in October. This increase led to an annualised gain of 1.4%, which was better than the previous 0.7%. Economists were expecting the number to rise by 1.2%. The core CPI, which excludes the volatile food and energy products, declined by 0.1%.
Meanwhile, the producer price index rose by 0.3% in November from the previous decline of 0.4%.
Stronger US dollar and low oil prices
The USD/NOK pair is rising because of the strong US dollar as the number of coronavirus cases rise. The dollar index, which measures the dollar against a basket of currencies, has risen by more than 0.45%.
This performance is mostly because of the new lockdown in Hebei, China. The government has announced a new lockdown there, which will affect more than 11 million people. This risks pulling the Chinese economy lower in the first quarter.
Similarly, the cases have continued to rise in other countries, including the United Kingdom, Germany, and the United States. Therefore, forex investors are likely worried that the vaccines will not have an immediate impact in the near term.
Further, the USD/NOK is rising because of the lower crude oil prices. The price of Brent has dropped by more than 1% while West Texas Intermediate (WTI) has fallen by more than 0.50%. This is because of the rising coronavirus cases and US oil rigs.
USD/NOK technical outlook
On the daily chart, we see that the USD/NOK pair formed a double-top pattern between September and November. In technical analysis, this pattern is usually bearish.
It has also moved below the 50-day and 25-day exponential moving averages and the notable support at 8.6697. Therefore, the bearish trend will likely continue falling as bears target the next resistance level at 8.00.