USD/NOK forms a bearish flag as Norwegian inflation slips

August 11, 2023 01:05 PM AEST | By Invezz

USD/NOK forms a bearish flag as Norwegian inflation slips — Image source: Invezz

US and Norway inflation data

The USD/NOK exchange rate has drifted upwards in the past few weeks. The price of crude oil has staged a major comeback after falling to below $70 a few months ago. Brent has jumped to $87 while West Texas Intermediate (WTI) rose to $82.67.

The USD to NOK exchange rate is usually mildly sensitive to the price of crude oil since Norway is the second-biggest oil producer in Europe after Russia. In many cases, the Norwegian krona does well when the price of oil is rising.

The other important catalyst for the Norwegian krona was the latest inflation data. Numbers by the Norwegian statistics agency showed that the headline consumer inflation continued falling last month.

The headline CPI dropped from 6.4% in June to 5.4% in July. This decline was deeper than the median estimate of 5.7%. On a MoM basis, the headline inflation dropped from 0.6% to 0.4%. These numbers mean that the country’s inflation peaked at 7.5% in November last year. Core inflation dropped from 7.0% to 6.4% in July.

US also published some encouraging inflation data. As we wrote here, the headline consumer inflation data rose from 3.0% to 3.2%, less than the median estimate of 3.3%. Core inflation slipped from 4.8% in June to 4.7% in July.

Watch here: https://www.youtube.com/embed/DZupzdU8xrc?feature=oembed

USD/NOK technical analysis

The 4H chart shows that the USD/NOK forex pair has drifted upwards in the past few days. It has moved from this month’s low of 9.9120 to a high of 10.3225. The pair has dropped below the 50-period moving average.

Most importantly, the pair has formed a bearish flag pattern, which is a bearish signal. It also flipped the important resistance at 10.2427, the lowest level on April 4th. Therefore, the pair will likely have a bearish breakout in the next few days as sellers target the key psychology level at 10.00.

The post USD/NOK forms a bearish flag as Norwegian inflation slips appeared first on Invezz.

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