The USDNOK has resumed the upside as the meteoric slump in crude oil price continues to pressurize the Norwegian Krone. The USDNOK is presently trading at 10.73160, which is 0.92% higher on the day as the pair aims to finish the day in winning territory for the 3rd straight session.
Crude oil is a major export commodity for Norway, with most of the revenue entering into the country’s Sovereign Wealth Fund. Therefore, the Norwegian Krone finds itself as a commodity currency with a positive correlation with crude oil prices, moving wherever the black gold goes. Furthermore, safe haven plays have seen the USD attract some hefty interest this week, which is helping prop up the pair.
The Head of the International Energy Agency Fatih Birol has called for more production cuts by OPEC + with an early implementation as a way to ease the present oversupply-induced pressure on the crude oil price. As at the time of writing, Birol’s comments in a Wednesday Bloomberg TV interview did not have any impact on stemming the drop in crude oil price. This is paving the way for today’s bullish session.
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The USDNOK bounced from the 61.8% Fibonacci price level on Monday but was rejected at the 50% Fibonacci level yesterday. Today’s bullish price action has been able to breach this level, but two successive closing penetrations above this rejection area are needed to confirm a breakout. A successful breakout could target the 10.83502 price level (24 March low and 26 March high), with possible advance to 10.99379 (38.2% Fibonacci level) if the price continues to gain strength from a further fall in crude oil price.
On the flip side, recovery on the Norwegian Krone requires a bounce back in crude oil price or some other affirmative action from the Norges Bank. This could allow the USDNOK to be beaten back towards the previous support levels at 10.64733 and possibly 10.32148 (61.8% Fibonacci retracement).
Crude oil price continues to be the main driver for the USDNOK pair.