On Thursday, Norway's central bank (Norges Bank) surprised markets by announcing a 25 basis point reduction in its policy interest rate to 4.25%, signalling the expectation of further cuts due to a more favourable inflation outlook. The cut was the first one since 2020.
Although the Norwegian inflation figures for March look a little better again after the significant upward surprise at the beginning of the year, Norges Bank is still likely to wait until June before lowering the key rate, Commerzbank's FX analyst Antje Praefcke notes.
EUR/NOK's recent breakout attempt above 12.05 was short-lived, as strong resistance pushed the pair back into its consolidation range. Key support at 11.68 now becomes critical for the near-term outlook, Societe Generale's FX analysts report.