USD/NOK falls below key SMAs, as Dollar continues to weaken

• USD/NOK is down 0.50% and is trading around the 10,650 level, below the double resistance of the 200- and 100-day SMA.
• The dollar faces downward pressure due to the Fed’s increasing dovish bets.
• On Thursday, the PCE figures for October will be published in the US, which will be the highlight of the week.

In Monday’s session, the pair USD/NOK plummeted, settling below the 200- and 100-day simple moving averages and hovering around 10,650 points. These movements are largely attributed to the growing weakness of the USD, especially before the US October Personal Consumption Expenditure (PCE) figures are released on Thursday, which will be important for expectations about the next movements of the Federal Reserve. No relevant data was reported during the session.

Next week will primarily focus on two key economic indicators for the dollar: the third-quarter Gross Domestic Product (GDP) figures and the Core Personal Consumption Price Index (CPI), which serves as the Federal Reserve’s preferred measure for measure inflation. It is important to note that the outcome of the PCE data will greatly influence the central bank’s near-term expectations, which could impact the trajectory of the USD/NOK pair.

The Fed has recently hinted that it has yet to see further signs of inflation declining following October’s Consumer Price Index (CPI) report, which noted a slowdown in inflation in the United States. In that sense, Thursday’s PCE and GDP figures will give markets more guidance on the current situation of the US economy to continue placing their bets. At the moment, rate swaps suggest no hike at the next December meeting, while investors are eyeing rate cuts by mid-2024.

That said, everything will depend on the data that is known, since the Fed has left the door open to further increases if necessary.

USD/NOK levels to watch

Given the technical indicators on the daily chart, selling momentum is in control for the moment. The Relative Strength Index (RSI) is showing a negative slope pointing to increasing bearish momentum. Furthermore, it is in negative territory, solidifying the dominance of the sellers. The Moving Average Convergence Divergence (MACD) further confirms the bearish tilt as the red bars are on an upward trajectory, indicating that the bearish momentum is gaining traction.

Another bearish signal is the positioning of the pair in relation to its simple moving averages (SMA). USD/NOK is trading below its 20,100 and 200-day SMAs, suggesting that bears’ control exceeds the immediate time frame.

Support Levels: 10,600,10,530,10,460.
Resistance Levels 10,660-10,680 (convergence of the 200 and 100 day SMAs), 10,705,10,730.

USD/NOK Daily Chart