The Norges Bank (Norway’s Central Bank) is set to release its interest rate decision and monetary policy report at its press conference tomorrow at 8am GMT. The Norges Bank kept its benchmark interest rate steady at 1.25% after its meeting in August, having hiked its rates by 0.25% on June 20. The consensus for this month’s release is for the Norges bank to hold rates steady at 1.25%.
If rates are held steady, focus will be on the content of the statement, and how hawkish or dovish the Norges bank will be about inflation and the state of the Norwegian economy. This will dictate the movement of the Norwegian Krone.
Technical Play for USDNOK
The Nowegian Krone is now trading against the USD at 8.93621, with the pair having reached an intraday low of 8.9157.
The USDNOK has been locked in a consolidating range in its pairing with the US Dollar on the 4 hour chart. However, the daily chart reveals the presence of a head and shoulders formation, with the neckline currently being tested.
The near-term resistance lies at the 9.0087 mark (August 25 high), and above this area, further resistance could be seen at 9.1259 (August 30 high). If the Norges bank releases a dovish statement and the FOMC decision tonight is deemed to be USD positive, we could see Norwegian Krone slump against the USD to se off an advancement towards the identified resistance levels and possibly higher.
On the flip side, if the Norges bank is hawkish and the FOMC decision and rate statement is dovish in nature, this will create a situation that could lead to a break of the pattern’s neckline to the downside, opening the door to 8.8077 (May 15 high in role reversal).