Facts:
- The USDNOK exchange rate has fallen below its 10-, 30-, and 100-day exponential moving averages (EMA; yellow, light purple, dark purple respectively), with today’s gains halted just before the EMA30.
- Norway’s core CPI inflation unexpectedly rose to 3.4% in October (Bloomberg consensus: 3.0%).
- The CME FedWatch Tool indicates a rise in the expected probability of a December U.S. rate cut.
Recommendation:
- Short position (Sell) on USDNOK at market price
- Target price (Take Profit; TP): 9.8810 (TP1), 9.8000 (TP2)
- Stop Loss (SL): 10.2700
Source: xStation5
Opinion
The USDNOK is breaking out of its recent upward wave after the Norges Bank’s announcement last week of a pause in further rate cuts, erasing over half of the gains recorded following Jerome Powell’s hawkish FOMC comments. Downward pressure on the pair was intensified by Monday’s higher-than-expected Norwegian CPI reading (core: 3.4% vs Bloomberg consensus: 3.0%).
While the hawkish stance of Norges Bank may already be priced in, the sticky core inflation and expanded government spending plans for 2026 should continue to limit expectations for monetary easing in Norway, thereby supporting the NOK. Meanwhile, markets have begun to reprice expectations for a December Fed rate cut — the previously balanced 50/50 odds after the last FOMC have now risen to nearly 65% (source: CME FedWatch) — suggesting that Fed expectations may continue to exert downward pressure on the USD.
From a technical perspective, the main risk to the short bias lies within the scope of the recent price structure. To maintain a downward momentum, the pair would need to remain below overlapping EMA and the 61.8% Fibonacci retracement level and not pause at the lower boundary of the geometry.
Methodology
This recommendation is based on technical analysis of the USDNOK chart and fundamental analysis of both economies (monetary policy). The trade direction was determined using exponential moving averages and price action (EMA crossover confirmation), along with market expectations ahead of the upcoming FOMC meeting. Take Profit and Stop Loss levels were defined using Price Action methodology and Fibonacci retracement levels — TP1 near the 23.6% level, TP2 slightly above the local bottom, and SL at a repeatedly tested resistance zone.
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