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UBS Forecasts Norwegian Krone to Strengthen Against Euro Through Mid-2027
UBS maintains a bearish outlook on the EUR/NOK currency pair, forecasting a sustained strengthening of the Norwegian krone against the euro through mid-2027. The bank's analysts project that the krone will overcome recent headwinds despite having retraced about half of its year-to-date gains.
Krone Strength Projected
In a note to clients, UBS outlined a path for the EUR/NOK exchange rate to decline steadily over the coming year. A lower EUR/NOK rate signifies a stronger krone.
UBS's specific targets for the pair are:
- September: 10.80
- December: 10.70
- March 2027: 10.60
- June 2027: 10.50
Based on this outlook, the bank recommended that clients consider entering short positions on the currency pair or selling into any rallies.
AdRationale and Market Context
UBS attributes its forecast to a "supportive external environment" that it believes will favor renewed krone strength, combined with an already "attractive carry." A carry trade is a strategy that involves profiting from the difference in interest rates between two currencies.
The bank's bullish stance on the krone comes after a period of weakness for the currency. According to UBS, the recent pullback was pressured by two main factors: falling oil prices and heightened expectations for global interest rate hikes.
What This Means for Investors
The forecast from UBS suggests that its analysts expect the fundamental drivers supporting the Norwegian krone to reassert themselves, eventually outweighing the recent negative pressures. For foreign exchange market participants, the outlook implies that the current weakness may represent a strategic opportunity for those anticipating a stronger NOK in the medium term.