31.05.201906:18 Forex Analysis & Reviews: EURNOK: EURO to gain over hawkish NOK? May 31, 2019

The euro managed to sustain the bullish momentum over the Norwegian Krone. The single currency is likely to extend further gains.

The Eurozone economy developed at a slower pace in 2018, following a robust growth in the previous year. The number of employed people had increased by more than ten million since mid-2013. The ECB staff projected the annual real GDP growth at 1.1% in 2019, 1.6% in 2020 and 1.5% in 2021. Headline inflation in the Eurozone had lately been flying around 1.5%, somewhat lower than in the figure of last year, when it was around 2.0%. The headline inflation was projected to be 1.2% in 2019, 1.5% in 2020 and 1.6% in 2021. For the longer term if the ECB manages to achieve the target GDP and inflation the euro will grow against all other major currencies.

The Norges Bank remains one of the more hawkish monetary authorities in the world while most other major central banks have paused their rate hike cycle. The inflation of Norway is expected to be 2.5% in 12 months, unchanged from the previous quarter. Expected annual inflation in 2 years is 2.5%, up 0.1% from the previous quarter. The annual wage growth is expected to be 3.1% in 2019 and 3.1% for next year also. 76.9% of households expect the prices for goods and services to be higher in the next 12 months, down 4.0 percentage points from the previous quarter. The main aim of the Norges bank is to maintain monetary stability by keeping inflation low and stable. In terms of GDP, Norway is much stronger than the Eurozone in comparing the last few year's data and the divergence is expected to continue as the Norges Bank is expecting another rate hike in June 2019. This week, the retail sales rate of Norway has improved from 0.6% to 1.8% while credit indicator showed a decrease of 0.1% from the last data.

As of the current scenario, the Norwegian economy showed some positive signals of recovery. The euro attracted the buyers' attention and rose moderately.

Now let us look at the technical view. The price is currently residing inside the range of 9.65 to 9.85 price area which is expected to play the inbound range rejection further as the price push higher towards 9.85 area. A rejection with daily close off the 9.85 area is expected to lead to further bearish pressure which may result in the price residing at the edge of 9.65 support area again in the future. As the price resides below 10.00 area with a daily close, the continuation of the bearish momentum is expected.