EUR/NOK bounces off daily lows at 10.1000

• EUR/NOK started the week on the defensive near 10.10.
• Norway CPI came in above estimates in January.
• Consumer Confidence figures coming up later in the week.

The Norwegian krone seems to have resumed the upside at the beginning of the week and is dragging EUR/NOK to the vicinity of the key support at 10.00 the figure.

EUR/NOK weaker post-upbeat CPI

The cross is fading Friday’s uptick and is resuming the corrective downside on Monday after being rejected from YTD highs near 10.28 earlier in the month.

In fact, higher-than-expected inflation figures in the Nordic economy lent extra legs to the krone on Monday after headline consumer prices came in flat on a monthly basis during January and rose 1.8% from a year earlier. Additionally, the key CPI-ATE (CPI adjusted for tax changes and excluding energy products) rose 2.9%, well above the Norges Bank’s 2.2% forecast.

The upside surprise in January’s CPI (pari passu with a sustainable increase above projections) could prompt the Norges Bank to revise up its inflation forecast for the current year as well as the rate path. By the same token, the probability of the Scandinavian central bank to shift its message to the dovish side should start to dwindle, supporting the view of a stronger NOK in the next periods.

Also sustaining the upbeat momentum in NOK, the risk complex remains somewhat supported by shrinking concerns around the Chinese coronavirus.

Later in the week, the only release in the Norwegian calendar will be the Consumer Confidence gauge on Thursday.

What to look for around NOK

NOK keeps gathering traction this month on the back of the improved tone in the riskier assets. In addition, Monday’s positive surprise from January’s inflation figures should remain supportive of a stronger currency in the very near-term at least. In the meantime, Brent dynamics and the broader risk appetite trends in light of the developments from the Chinese coronavirus remain the key driver for NOK and its peers. On the macro scenario, the likeliness of a stronger krone on the back of a (now expected) less dovish Norges Bank could grab extra pace ahead of the central bank’s meeting in March.

EUR/NOK significant levels

As of writing the cross is losing 0.33% at 10.1349 and a breach of 10.0969 (monthly low Feb.6) would expose 10.0459 (50% Fibo of the 2020 rally) and finally 9.9237 (200-day SMA). On the upside, the next hurdle emerges at 10.2131 (monthly high Dec.4 2019) followed by 10.2755 (2020 high Feb.3) and then 10.3130 (2019 high Oct.31).