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UBS Projects Norwegian Krone to Strengthen Against Euro Through Mid-2027
UBS strategists are maintaining a bearish forecast for the EUR/NOK currency pair, anticipating the Norwegian krone will strengthen against the euro through the middle of 2027. The bank's outlook comes despite a recent pullback where the krone has given back about half of its year-to-date gains versus the single currency.
Krone Forecast and Strategy
UBS projects a steady decline in the EUR/NOK exchange rate over the next year. The bank's specific targets are:
- 10.80 by September
- 10.70 by December
- 10.60 by March 2027
- 10.50 by June 2027
Based on this forecast, UBS recommends that investors consider entering short positions on the currency pair at current levels or selling into any rallies, according to its note.
AdDrivers and Recent Headwinds
UBS attributes its positive outlook for the krone to a combination of a supportive external environment and what it describes as an already attractive carry. Carry trades involve investors profiting from the interest rate differential between two currencies, which can drive demand for the higher-yielding currency.
However, the bank acknowledges the krone's recent weakness. This retracement was reportedly driven by pressure from two main factors: falling oil prices and heightened expectations for global interest rate hikes, which can dampen risk sentiment and affect commodity-linked currencies like the krone.