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Trade of The Day: USD/NOK

  • The USDNOK exchange rate ended yesterday’s session above the 100-day exponential moving average (EMA100; purple).
  • Brent crude oil futures (OIL) are losing ground for the second consecutive session, slipping below 90 USD per barrel—their lowest level since April 20, 2026.
  • CPI inflation in Norway fell to 3.1% in May from 3.4% in April.

Recommendation:

  • Position: Long (BUY) on USDNOK at market price
  • Target Price (Take Profit; TP): 9.6540 (TP1), 9.7840 (TP2)
  • Stop Loss (SL): 9.4000

Source: xStation5

Opinion

USDNOK is gaining momentum, increasingly solidifying a trend reversal on a pair whose volatility in recent months was primarily shaped by upward pressure on oil prices. Over the past two weeks, the price crossed three exponential moving averages (the 10-, 30-, and 100-day EMA; yellow, light purple, and dark purple, respectively) and successfully defended support where the EMA100 overlaps with the 50.0 Fibonacci retracement level of the latest downward wave. This technical bullish momentum is also well-supported by geopolitical and macroeconomic realities. Fluctuations in the Trump administration’s stance toward Iran did not trigger significant volatility (by recent months’ standards) in oil contracts, and the cancellation of an attack planned for yesterday contributed to a sharp drop in commodity prices.

This suggests that, for the market, the worst regarding the Strait of Hormuz is already behind us, thereby causing the risk premium for oil-producing countries’ currencies to fade out. Alongside the correlation between the Norwegian krone and oil, the latest inflation reading from Norway indicated a second consecutive drop in CPI, with economists forecasting a further decline in price pressure—particularly in the food sector, which is vital for households and their expectations. Meanwhile, in the US, hawkish expectations are mounting for the Fed (OIS curve imlies 73% chance for a hike bedore the end of 2026), benefiting the greenback. Therefore, the monetary policy trajectories of both economies consistently support a continuation of the upward move in USDNOK. A short-term risk remains the near-overbought condition of the pair. The RSI sits right below the 70-point threshold (currently at 66.4), which may discourage investors from pushing the exchange rate higher without a minor technical correction.

Methodology

The recommendation was prepared based on a technical analysis of the USDNOK chart and a fundamental analysis of the discussed economies (monetary policy in Norway and the US), as well as the exchange rate’s correlation with crude oil prices. The direction of the recommendation was determined using moving averages and market expectations regarding Fed policy. The Take Profit and Stop Loss levels were set using Fibonacci retracements and price action (TP1 and TP2 at the 78.6 and 100 Fibo levels of the last downward wave; SL at the 38.2 Fibo level).

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Euro: Seen drifting toward 1.1400 against US Dollar – BBH

Brown Brothers Harriman’s Elias Haddad reports that EUR/USD briefly dipped toward 1.1500 after the ECB decision before rebounding on the US-Iran breakthrough. Haddad expects EUR/USD to edge lower and stabilize closer to 1.1400 as US growth outperforms the Eurozone. The ECB’s 25 bps hike and hawkish inflation stance are seen cushioning, but not reversing, Euro downside.

Euro pressured by weaker growth outlook

“EUR/USD dipped towards 1.1500 following yesterday’s ECB policy decision before rebounding to a high of 1.1590 driven by the positive US-Iran breakthrough. We expect EUR/USD to edge lower and stabilize closer to 1.1400, reflecting a stronger US growth outlook relative to the Eurozone. ECB rate hikes in a sluggish growth, high inflation environment, is not bullish for EUR but should help cushion the downside”

“As was widely expected, the ECB raised the policy rate 25

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UK GDP Contracted and the Pound is Up?

pril 2026 as a result of the escalating conflict in the Middle East. According to the latest data from the Office for National Statistics (ONS), this marks the first monthly GDP decline since August 2025. Although this contraction aligns with forecasts from economists polled by Reuters, it represents a sharp trend reversal from March, which recorded a 0.3% growth. However, looking at the less volatile three-month perspective, real GDP grew by 0.7% in the period to April 2026, demonstrating that the British economy entered the current crisis on relatively stable foundations.

Chart 1: Real and nominal GDP in the United Kingdom (upper panel) and quarter-on-quarter change (lower panel). In Q1 2026 (January–March), the UK economy grew by 0.6%, offering a solid base by British standards before the effects of the Middle East war materialized. Source: XTB Research based on ONS/Bloomberg data.

How the Iran Conflict Stalled Growth in the United Kingdom

The main catalyst for April’s slowdown is the war between Iran and the US, which recently passed the 100-day mark. The effective blocking of the Strait of Hormuz—a crucial shipping route for oil and many other commodities—paralyzed global supply chains and triggered a sharp surge in energy and fuel prices. As a net energy importer, the UK is exceptionally vulnerable to international energy shocks. A sudden surge in prices at petrol stations forced motorists to drastically cut consumption in April, reversing the positive growth impulses seen at the beginning of the year. Furthermore, ONS surveys revealed widespread complaints from businesses regarding falling turnovers and rising production costs across the wholesale, manufacturing, and transport sectors.

Sector Breakdown: Slump in Services, Stagnation in New Construction

April’s economic slowdown was characterized by uneven performances across core industrial sectors:

  • Services Sector: Recorded a 0.2% decline, becoming the primary driver of the monthly GDP drop. The arts, entertainment, and recreation sector suffered the most, posting a drastic 9.1% fall. This was mainly due to the cancellation of multiple sporting events in the Middle East, which directly hit UK-based companies.
  • Construction: Ticked up marginally by 0.1%. However, this growth came solely from a 0.6% recovery in repair and maintenance. New construction projects fell by 0.3%, complicating the government’s political promises to accelerate housebuilding in the UK.
  • Industrial Production: Showed zero growth (0.0%). Although manufacturing grew by 0.4% (driven by a 4.2% surge in pharmaceutical production), these gains were completely offset by shrinking outputs in the utility sector.

Stagflation Risks and the Bank of England’s Dilemma

The sudden dip in GDP momentum has raised serious concerns about a dangerous descent towards stagflation—a situation where economic stagnation couples with stubborn inflation. The International Monetary Fund (IMF) has already downgraded its 2026 UK economic growth forecast from 1.3% to just 0.8%, warning that Britain could feel the impact of the war most acutely among major economies. Economic conditions could deteriorate further in the third quarter, when the domestic energy price cap is set to rise by 13%, allowing suppliers to pass higher oil and gas costs onto consumers. This leaves the Bank of England in a precarious position ahead of its upcoming interest rate decision. Policymakers must now balance combating war-driven inflation against the risk of triggering a deeper recession.

Following the ONS release, sterling initially lost 0.2% against the dollar as markets scaled back expectations for subsequent rate hikes. Over time, however, a global increase in risk appetite took over in response to easing tensions between the US and Iran, resulting in a weaker dollar. Moreover, the softer GDP does not eliminate the hawkish pressure on the Bank of England, which is widely expected to hold interest rates at 3.75%. Some members of the Monetary Policy Committee may vote for a hike, signaling the central bank’s readiness to combat the prolonged energy shock.

Chart 2: The Bank of England’s main interest rate and UK 2- and 10-year bond yields. Yields are already clearly above the 3.75% rate, signaling hawkish expectations from the debt market, which is organically tightening financial conditions. Source: XTB Research based on Bloomberg data.

Technical Analysis: GBPUSD (D1)

GBPUSD is currently trading slightly up (+0.05%), although the pair on the D1 interval remains in a local downtrend, consolidating around the 1.34158 level. The price is currently moving below key exponential moving averages: EMA 30 (1.34226) and EMA 100 (1.34372), which act as crucial resistance for any building momentum. Following a rebound from recent support near 1.3330, selling pressure has slowed down. The RSI (14) indicator at 49.5 signals complete market neutrality. The next direction depends on a sustained breakout above the moving averages or a return to test the recent lows.

Chart 3: GBPUSD and EURGBP (inverted; blue) exchange rates. Source: xStation5

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Euro steadies against British Pound following UK GDP, German HICP inflation data

  • EUR/GBP remains subdued following the release of data from the UK and Germany.
  • UK GDP contracted by 0.1% month-on-month in April, meeting market forecasts after a 0.3% expansion in March.
  • German May HICP inflation met forecasts, landing at 2.7% year-on-year.

EUR/GBP inches lower after two days of gains, trading around 0.8630 during the Asian hours on Friday. The currency cross remains subdued following the release of economic data from the United Kingdom (UK) and Germany.

The UK Gross Domestic Product (GDP) contracted by 0.1% MoM in April, following a 0.3% rise reported in March. The market forecast was for a 0.1% decline in the same period. Meanwhile, the Index of Services (April) rose 0.8% 3M/3M versus March’s 0.8%. Meanwhile, monthly Industrial Production came in at 0% MoM in April, while Manufacturing Production increased by 0.4% during the same period.

Money markets are currently pricing in at least a 25-basis-point interest rate hike by the Bank of England (BoE) this coming September, with a strong probability of a second increase before the end of the year. This potential tightening comes amid broader economic challenges, as political uncertainty surrounding the leadership of the Labour Party continues to weigh on investor sentiment and compound the current downturn.

Over in the Eurozone, inflation data met forecasts as Germany’s revised Harmonized Index of Consumer Prices (HICP) for May landed at 2.7% year-on-year. On a monthly basis, HICP growth experienced a slight contraction of 0.1%.

The European Central Bank (ECB) took aggressive action on Thursday by raising interest rates for the first time in nearly three years. The central bank also signaled a prolonged hawkish stance, indicating that restrictive monetary policy will likely remain firmly in place through 2027.

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Euro: Complex rate path questions for EUR – Commerzbank

Commerzbank’s Thu Lan Nguyen notes the European Central Bank sounded slightly hawkish, but investors already price in two further hikes, leaving the Euro softer after President Lagarde avoided clear guidance. Nguyen argues whether hikes come in July or later still matters, as an earlier move would signal urgency, yet markets may see rapid tightening as a policy mistake and price in future cuts, limiting Euro support.

ECB timing debate clouds Euro outlook

“Basically, things turned out just as my colleague Michael had predicted in the morning: in our view the ECB sounded slightly hawkish yesterday. But that was not enough to lure investors out of hiding who are already pricing in two further rate hikes by the end of the year anyway. Accordingly, the euro ultimately edged slightly lower, as President Lagarde avoided sending a clear signal in favour of further rate hikes.”

“This was probably not the main reason for the upward move in EUR/USD over the course of yesterday’s trading – the decisive factor here was US President Trump’s statement that he had called off another military strike against Iran because a deal was virtually in the bag. However, it is likely to have contributed to positive euro sentiment. After all, the discussion shows that a rate hike in July is at least on the table.”

“One might argue: whether the next two rate hikes expected by the market take place in July and September, or in September and December, hardly makes a big difference and is therefore irrelevant for the euro. But it is not quite that simple. A second rate hike as early as July would suggest a certain urgency behind the tightening and would therefore have a somewhat hawkish flavour.”

“If the market shares this view, it is likely to price in a rapid correction in rates downwards at the long end, which would dilute – if not completely negate – the positive effect of the rate hike for the euro. So: the debate about the timing of the next rate hike is by no means irrelevant. The situation is more complex than it appears at first glance

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Canadian Dollar softens on strong US PPI data, US-Iran peace deal uncertainty

  • USD/CAD edges higher to around 1.3980 in Friday’s early Asian session. 
  • The annual US PPI inflation rate was the highest since November 2022. 
  • BoC left the interest rates unchanged at its June meeting on Wednesday. 

The USD/CAD pair gains traction to near 1.3980 during the early European trading hours on Friday, bolstered by hot US inflation data. Traders will closely monitor the developments surrounding the US-Iran peace deal. The preliminary reading of the Michigan Consumer Sentiment Index for June is due later on Friday. 

Data on Thursday showed US Producer Price Index (PPI) inflation rose more than expected in May, leading to the largest annual gain in three and a half years as the Middle East conflict drove up the cost of energy products.

The Fed is clearly missing its inflation target by a lot more than it is missing its employment objective,” said John Ryding, chief economic advisor at Brean Capital. “The PPI report should further embolden those on the FOMC who think a rate hike might be needed later in the year,” Ryding added. 

US President Donald Trump said on Thursday that the US and Iran could sign a peace deal as soon as this weekend that would reopen the Strait of Hormuz to shipping. Iran countered that it had not reached a final decision on an agreement. However, uncertainty remains high amid ongoing tensions in the Middle East. 

US forces intercepted and shot down two Iranian one-way attack drones near the Strait of Hormuz on Thursday after Iran attempted to target commercial vessels transiting the waterway, per Fox News. The Islamic Revolutionary Guard Corps (IRGC) said that the country is stronger than ever and ready to deliver a “decisive, immediate, painful and regret-inducing response” to any aggression.

On the Loonie front, the Bank of Canada (BoC) on Wednesday decided to hold its key interest rate unchanged as expected and said it was ‌seeing limited evidence that higher energy prices were fueling broad-based inflation.

Nonetheless, BoC Governor Tiff Macklem reiterated that the bank would not hesitate to raise rates if need be to keep inflation in check. “The Governing Council is continuing to look through the war’s near-term impact on headline inflation but will not let higher energy prices become persistent inflation,” according to the BoC statement. 

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British Pound: Bullish bias within higher band against US Dollar – UOB

United Overseas Bank’s (UOB) Quek Ser Leang and Lee Sue Ann observe that GBP/USD’s surge to 1.3434 has stretched short-term conditions, but further gains toward a retest of 1.3435 remain possible, with 1.3465 unlikely to break. Over 1–3 weeks, they expect range trading in a higher 1.3340–1.3465 band after shifting from a negative to neutral stance, with momentum not yet strong enough for a sustained advance.

Pound holds firm but capped near resistance

“24-HOUR VIEW: While we expected GBP to “edge lower” yesterday, we indicated that “any decline is likely part of a lower range of 1.3330/1.3395.” We added that GBP “is unlikely to break clearly below 1.3330.” GBP subsequently broke below 1.3330 (low of 1.3325), but it then lifted off and surged to a high of 1.3434. While the rapid rise has room to extend, overbought conditions suggest that any advance is likely limited to a retest of 1.3435. The next resistance at 1.3465 is unlikely to come under threat. Support is at 1.3385; a breach of 1.3365 would indicate that GBP is more likely to range-trade rather than retesting 1.3435.”

“1-3 WEEKS VIEW: We revised our view from negative to neutral yesterday (11 Jun, spot at 1.3365). We indicated that the earlier “downward momentum has faded, and for the time being, GBP is likely to trade in a range between 1.3300 and 1.3435.” GBP then dipped to 1.3325 and then soared, testing the upper boundary of our range with a high of 1.3434. Upward momentum has increased, but not sufficiently to indicate a sustained advance. For the time being, we continue to expect range-trading, though the range has shifted higher to 1.3340/1.3465.”

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Germany’s final Harmonized Index of Consumer Prices for May remains at 2.7% YoY: What it means for EUR/USD?

Germany’s final Harmonized Index of Consumer Prices (HICP) data for May has arrived at 2.7% Year-on-Year (YoY), as the preliminary data showed. The inflation data cooled down from 2.9% in April. On a monthly basis, it is confirmed that the German HICP growth declined by 0.1%.

There is a slight recovery move in the EUR/USD data, following the German final HICP data release; however, it appears that the move has come due to a slight correction in the US Dollar (USD). Still, the major currency pair is down 0.15% to near 1.1560.

Euro Price Today

The table below shows the percentage change of Euro (EUR) against listed major currencies today. Euro was the weakest against the US Dollar.

USDEURGBPJPYCADAUDNZDCHF
USD0.10%0.06%0.19%0.06%0.20%0.29%0.13%
EUR-0.10%-0.05%0.09%-0.04%0.11%0.19%0.02%
GBP-0.06%0.05%0.15%0.01%0.12%0.23%0.08%
JPY-0.19%-0.09%-0.15%-0.15%-0.01%0.08%-0.08%
CAD-0.06%0.04%-0.01%0.15%0.14%0.22%0.07%
AUD-0.20%-0.11%-0.12%0.01%-0.14%0.07%-0.08%
NZD-0.29%-0.19%-0.23%-0.08%-0.22%-0.07%-0.14%
CHF-0.13%-0.02%-0.08%0.08%-0.07%0.08%0.14%

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent EUR (base)/USD (quote).

What do Germany’s final HICP data mean for EUR/USD?

The impact of Germany’s final HICP data remains little on EUR/USD, unless there is a dramatic deviation. The major trigger for the major currency pair remains preliminary readings.

Meanwhile, the European Central Bank’s (ECB) monetary policy announcement on Thursday, in which it raised the Deposit Facility rate by 25 basis points (bps) to 2.25%, signaled that policymakers remained highly concerned about upside inflation risks due to elevated energy prices in the wake of Middle East conflicts.

ECB President Christine Lagarde said in the press conference, post the monetary policy announcement, “Short-term inflation expectations have risen,” and the central bank will “monitor size, persistence of energy price increase”.

Technical Analysis:

EUR/USD trades lower at around 1.1560, keeping a bearish bias as spot holds beneath the 20-period Exponential Moving Average (EMA) at 1.1603 and the broader downtrend resistance line near 1.1687. The pair is still riding an underlying ascending support structure from 1.1503, but the latest Relative Strength Index (14) reading around 42 suggests sellers retain the near-term initiative while any rebounds are likely to struggle against overhead supply.

On the topside, initial resistance is located at the 20-period EMA around 1.1603, with the descending trend-line resistance at 1.1687 acting as the next barrier if buyers manage a clearer bounce. On the downside, the first key support emerges at the rising trend-line break level near 1.1503; a daily close below this floor would expose it to the March 13 low at 1.1411.