Insights 
VT 
Divergence In Central Bank Policy
We see a clear divergence in central bank policy on the horizon. Norges Bank looks set to cut its key interest rate in September, as Norway’s July 2025 inflation report showed a cooling to 2.8%, while the Eurozone’s core inflation remains sticky above 3%. This policy split points toward the euro gaining strength against the Norwegian krone.
For traders, this could mean buying EUR/NOK call options with expirations late in the year to capture this expected move. A decisive move above the 12.00 level would serve as a strong bullish signal. We also remember from historical data that the krone has shown a tendency to weaken in the final quarter of the year, a pattern observed in 6 of the last 10 years.
Headwinds for the krone are also coming from the oil market. OPEC+ recently confirmed it will increase supply by 500,000 barrels per day starting in October, a move that has softened crude prices from their summer highs. This creates a challenging backdrop for the oil-sensitive Norwegian currency.
Looking at the dollar, we see medium-term weakness against the krone developing due to America’s fiscal challenges. The latest Congressional Budget Office update projected the U.S. deficit to exceed $2.1 trillion for this fiscal year. This requires massive Treasury issuance at a time when recent data shows foreign central banks have been net sellers of U.S. debt for three straight months.
Capital Flow Dynamics
This outlook suggests that selling USD/NOK rallies with futures contracts or buying put options near the 10.20–10.30 resistance level could be a viable strategy. This approach is designed to capitalize on expected dollar weakness over the coming months. The structural case for a weaker dollar is reinforced by a high share of U.S. liabilities being held in government paper, increasing depreciation risk.
The dynamic is also shaped by global capital flows, as the higher U.S. tariffs implemented earlier in 2025 are expected to cool domestic demand. In contrast, new green energy infrastructure funds launched in the euro area this year are attracting significant foreign investment. This shift in capital could continue to pull funds away from the dollar.
