The Norwegian krone strengthened after Norway’s CPI jumped in January. The data was released on Tuesday. After the release, markets removed expectations for any Norges Bank rate cut in 2026.
Some called the move premature. Inflation in Norway has been volatile. If inflation falls back toward 3.0% in the coming months, markets may again price in a rate cut by summer.
EUR/NOK was seen as fairly valued in the short term after markets repriced Norwegian rate expectations in a more hawkish direction. Under this view, the krone would likely need a more dovish shift to lose momentum.
Attractive domestic rates could support the krone if overall risk sentiment stabilizes. In the near term, NOK was preferred over SEK.
The article says it was produced using an Artificial Intelligence tool and reviewed by an editor.
The Norwegian krone surged after Tuesday’s surprise January inflation report. Core CPI rose to 4.2%. This led markets to fully price out any Norges Bank rate cuts for the rest of 2026. EUR/NOK fell toward 11.35.
We think the market reaction is too strong. In 2025, inflation was often volatile: big monthly jumps were followed by softer readings as energy prices normalized. We expect a similar pattern now. Inflation could return toward 3.0% by summer, which would put rate cuts back on the table.
For now, it is hard to fight the krone’s momentum. Norges Bank’s policy rate is still a strong 4.5%, giving NOK a clear yield advantage. Unless we get a dovish trigger—such as a much weaker inflation print next month—the krone should stay supported. That is even more likely if global equities stabilize after this week’s dip.
Derivative traders could consider selling short-dated EUR/NOK calls to collect premium while the krone is strong. If you expect a reversal in summer, you could buy longer-dated EUR/NOK call options with June or July expiry. This aims to benefit from a possible dovish repricing without betting against the near-term trend.
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