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UBS Forecasts Norwegian Krone to Strengthen, Targeting 10.50 for EUR/NOK by Mid-2027
UBS has reiterated its bearish outlook on the EUR/NOK currency pair, projecting the Norwegian krone will strengthen against the euro over the next year despite its recent weakness. The bank's forecast, outlined in a recent analyst note, anticipates the pair will fall to 10.50 by the middle of 2027.
The Forecast Trajectory
Analysts at the Swiss investment bank laid out a specific path for the krone's expected appreciation against the euro. Based on this view, UBS recommended that clients consider entering short positions on the pair at current levels or selling into any rallies.
UBS's quarterly targets for the EUR/NOK exchange rate are as follows:
- September: 10.80
- December: 10.70
- March 2027: 10.60
- June 2027: 10.50
AdMarket Context and Rationale
The forecast comes even as the Norwegian krone has retraced approximately half of its year-to-date gains versus the euro. UBS attributed this recent pullback to pressure from falling oil prices and heightened expectations for global interest rate hikes.
Despite these headwinds, the bank's conviction for a stronger krone is rooted in what it calls a "supportive external environment" and "already attractive carry." For investors, carry trades involve borrowing in a low-interest-rate currency to invest in a higher-yielding one, and UBS sees this dynamic favoring the krone going forward.