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UBS Projects Norwegian Krone to Strengthen Against Euro Through Mid-2027
UBS has reiterated its bearish forecast for the EUR/NOK currency pair, projecting that the Norwegian krone will strengthen against the euro through mid-2027. The bank's outlook comes even as the krone has recently given back approximately half of its year-to-date gains versus the single currency.
The Forecast
According to a note from the Swiss investment bank, the projected decline in the EUR/NOK rate is expected to be gradual over the coming year. UBS provided the following specific targets for the pair:
- September: 10.80
- December: 10.70
- March 2027: 10.60
- June 2027: 10.50
In light of this forecast, UBS stated it recommends that traders enter short positions on the currency pair at current levels or consider selling into any rallies.
AdMarket Context and Rationale
The recent weakness in the Norwegian krone has been driven by a combination of falling oil prices and heightened expectations for global interest rate hikes, according to UBS. These factors have put pressure on the commodity-linked currency.
However, the bank believes these are temporary headwinds. UBS attributes its bearish stance on EUR/NOK to what it calls a "supportive external environment" that should favor renewed strength in the krone. The bank also cited the currency's "attractive carry," which refers to the yield advantage of holding the krone over the lower-yielding euro, as a key factor supporting its outperformance.