FxNews—In today’s EURNOK forecast, the currency pair experienced a significant and unexpected drop from its November high, even after crossing above the 11.8 resistance.
EURNOK Forecast – Is There a Room for Correction
The EURNOK pair is now nearing the 50% Fibonacci retracement (11.6186). This price level has proven to be strong support in the past, as the price has reacted to it on three occasions. To gain a clearer understanding of the EUR/NOK price action, it’s beneficial to delve into the 4-hour chart.
This chart shows that EURNOK trades within a bearish flag, with the RSI indicator dipping into the oversold area. This reflects the considerable bearish pressure on the pair. According to the daily chart, the bears’ target might be around 11.618.
However, the pair could rebound from the S1 support level (11.655), especially considering it recently formed a long-wick bullish candlestick pattern. It’s too early to determine whether the EURNOK will reverse its trend from this support area. For a trend reversal, the pair must break out from the bearish flag.
In conclusion, our EURNOK forecast suggests a potential easing in the downward momentum, with a possible correction to the 50% Fibonacci retracement level seen in the 4-hour chart. This key level is located at 11.82.
EURNOK Fundamental Overview
Bloomberg—In October 2023, Norway experienced a noticeable shrinkage in its trade surplus, falling to NOK 86.9 billion from the NOK 97.7 billion recorded in the same month the previous year. This decrease is primarily attributed to a greater decline in exports than imports.
Exports took a significant hit, dropping by NOK 9.0 billion year-on-year to reach NOK 174.3 billion. This downturn was influenced mainly by reduced sales in several key sectors:
- Mineral fuels, lubricants, and related materials saw a 15.0% decrease.
- Manufactured goods classified chiefly by material declined by 11.4%.
- Chemicals and related products n.e.s (not elsewhere specified) fell by 10.2%.
The decline was less severe on the import side, with a 6.8% decrease to NOK 87.4 billion. This reduction in imports was seen across various categories:
- Mineral fuels, lubricants, and related materials dropped by 16.4%.
- Crude materials, inedible, except fuels, decreased by 21.2%.
- Machinery and transport equipment went down by 12.1%.
- Chemicals and related products n.e.s decreased by 10.6%.
- Miscellaneous manufactured articles saw a 7.2% reduction.
Yearly Trade Performance: A Broader Perspective
The overall picture becomes more apparent in the first ten months of 2023. Norway’s trade surplus plunged by a significant 49.4% compared to the previous year, at NOK 695.7 billion. This change was due to a 30.2% slump in exports, while imports slightly grew by 1.1%.
Economic Implications
The narrowing of the trade surplus in Norway, especially with a sharp drop in exports, is concerning. Exports are vital to a country’s economy, bringing in revenue and balancing trade.
The sectors that experienced the most significant declines, such as mineral fuels and manufactured goods, are crucial for Norway’s economic health. A prolonged decrease in these areas could have negative repercussions, including reduced national income and potential job losses in affected industries.
However, the slight increase in imports could indicate a stable domestic demand, showing the economy’s resilience. Monitoring these trends closely is essential to understand the long-term impacts on Norway’s economy. A balanced approach to boosting exports while maintaining healthy import levels will be crucial for sustained economic stability and growth.
J.J Edwards is a finance expert with 15+ years in forex, hedge funds, trading systems, and market analysis.
