The EUR/NOK currency pair pulled back from a 5-week high of 11.3412 on Tuesday, as a rebound in oil prices provided support to the Krone ahead of the outcome of Norges Bank’s policy meeting.
The oil rebound came amid growing concerns over supply disruptions as tensions in the Middle East intensify and the risk of broader regional conflict increases.
Market sentiment is being driven by fears that attacks on critical energy infrastructure could escalate, particularly as US-aligned Gulf states move closer to direct participation in the ongoing Iran conflict.
Norges Bank is expected to leave its key policy rate without change at 4% at its March 26th meeting.
Norway’s annual inflation has remained well above Norges Bank’s target, which suggests a restrictive monetary policy is still necessary.
Yet, in January, the central bank said interest rates could be lowered later in 2026, in case the economy evolves as projected.
Meanwhile, higher energy costs in the Euro Area are adding to inflation expectations, which support the European Central Bank’s hawkish leaning.
The ECB has recently underscored that geopolitical tensions have rendered the outlook “significantly more uncertain”, highlighting upside risks to inflation and downside risks to growth.
The EUR/NOK currency pair was last down 0.75% on the day to trade at 11.2274.
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