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UBS Forecasts Norwegian Krone to Strengthen Against Euro Through Mid-2027
UBS analysts are forecasting a steady strengthening of the Norwegian krone (NOK) against the euro (EUR) through mid-2027, maintaining a bearish outlook on the EUR/NOK currency pair despite its recent losses.
Forecast Details
The forecast comes after the Norwegian krone retraced approximately half of its year-to-date gains versus the euro. According to a note from UBS, this pullback was pressured by falling oil prices and heightened expectations for global interest rate hikes.
Despite the recent weakness, the bank projects a gradual decline in the EUR/NOK exchange rate over the next year, setting the following targets:
- September: 10.80
- December: 10.70
- March 2027: 10.60
- June 2027: 10.50
AdRationale and Market Outlook
UBS attributes its stance to a supportive external environment that it believes will favor renewed strength in the krone. The bank also highlighted the currency's attractive carry, which refers to the potential profit from the interest rate differential between the two currencies, as a key supporting factor.
Based on this analysis, UBS recommends that traders consider entering short positions on the EUR/NOK pair at current levels or selling into any rallies. The bank expects the Norwegian krone to continue outperforming the euro over the forecast horizon.