EUR/NOK expected to resume downtrend as Norway’s economy outperforms

UBS projects a continued downtrend for EUR/NOK, forecasting targets of 11.30 to 11.10 by Q2 2026 and 11.0 by September 2026, as the Norwegian krone stabilizes and economic fundamentals strengthen. This outlook is underpinned by robust GDP growth, Norges Bank's 'cautious normalization' stance, and fading rate cut shock, while reduced trade uncertainty and a broader European recovery are also expected to support NOK strength. However, renewed trade threats or disruptive announcements could push the pair back to the 12.0 resistance level.

Analysis

UBS has revised its forecast for the EUR/NOK currency pair, projecting a sustained downtrend driven by strengthening Norwegian economic fundamentals. The bank now targets 11.30, 11.20, and 11.10 through the second quarter of 2026, with a further objective of 11.0 by September 2026. This outlook is supported by the fading shock of Norges Bank's unexpected June rate cut and robust domestic data, including a GDP beat and a Regional Network Survey indicating activity near historical averages. Norges Bank's commitment to 'cautious normalization' without signaling a near-term rate cut could shift market sentiment towards a more hawkish stance, further bolstering the NOK. From a technical perspective, UBS identifies 12.00 as a significant resistance level that has held during risk-off periods, with support seen at 11.50 and 11.30. The primary risk to this forecast is a resurgence in global trade threats or disruptive announcements, as the pair is highly sensitive to risk sentiment, which could push it back towards the 12.00 resistance.

Key Decisions for Investors

• Investors with a bearish outlook on EUR/NOK could consider initiating or adding to short positions, aligning with the fundamental and technical case for NOK appreciation against the EUR.
• Traders should monitor the 11.50 level as a key support and potential entry point, while using the 12.00 resistance level as a reference for setting stop-losses or re-evaluating short positions.
• It is crucial to remain vigilant of global trade headlines and broad market risk sentiment, as any deterioration could quickly reverse the downtrend and invalidate the current bearish thesis.