The Norwegian krone (NOK) rose in April, up 4.2% against the US dollar (USD) and 2.9% against the euro (EUR), with gains increasing during the latest session. The move came amid resilient US equities and higher oil prices.
ING had previously set 10.80–10.85 as an expected trading area for EUR/NOK this month, but now sees further downside risk for the pair. This shift follows stronger risk sentiment than previously assumed.
Norges Bank is expected to raise interest rates by 25 basis points on 7 May, while markets have priced in 19 basis points. There is also a possibility of another rate rise later in the year, and Norges Bank may leave open the option of further tightening in May.
The article was produced with the help of an Artificial Intelligence tool and reviewed by an editor.
We are seeing the Norwegian krone attempt another rally this April, which reminds us of the impressive strength it showed back in 2025. This move is being supported by resilient US equities and Brent crude oil prices, which have recently stabilized above $85 a barrel. These are the ideal conditions for the NOK to find support and potentially outperform other currencies.
Looking back to April 2025, we had underestimated the krone’s potential, initially targeting 10.80 for the EUR/NOK pair before it rallied even further. Today, with EUR/NOK trading at a much weaker level for the krone, around 11.60, the potential downside for the pair is considerably larger if history repeats. This suggests that any sustained positive risk sentiment could trigger a much sharper correction this time.
The key factor remains the Norges Bank, which is expected to hold its policy rate at a restrictive 4.50% in its upcoming May meeting. Unlike last year when we correctly anticipated a rate hike, the current dynamic is one of divergence, as other major central banks are signaling rate cuts. With Norway’s core inflation still hovering over 4%, the central bank has little reason to soften its stance, making the NOK attractive from a yield perspective.
For traders, this creates a compelling case for positioning for krone strength over the next few weeks. Given the potential for a swift move, buying put options on the EUR/NOK or call options on the NOK could be a prudent strategy. This approach offers exposure to a potential sharp rally in the krone while clearly defining the maximum risk involved.
