How the latest trade war developments have affected the Norwegian krone
However, the euro's decline and the krone's simultaneous strengthening suggest that Norway's currency may be better positioned than headlines indicate, especially in the broader, long-term view.
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Analysts predict Norway's krone could make up lost ground on the euro and US dollar
Short-term dollar strength, long-term doubts
The dollar's initial bounce was largely psychological, according to currency strategist Nils Kristian Knudsen of Handelsbanken.
"The dollar has been hit hard by trade tensions, so any form of clarification gives it some relief," Knudsen told the newspaper e24.
"But this is not a done deal. The damage to the dollar's credibility is already done."
Knudsen argued that the Trump administration has weakened foreign confidence in the dollar by using it as a policy lever
in trade disputes
, making long-term dollar strength unlikely.
"The market has realized that the dollar can be used as a bargaining chip," he added.
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Senior strategist Dane Cekov at Sparebank 1 Markets echoed the sentiment, noting that while some recovery in the dollar is expected, much of the upside has already been priced in.
Although we may see short-term gains, I still expect a weaker dollar over the long term, Cekov said.
"Uncertainty is lower than before, but it's far from gone."
READ ALSO:
What are the US tariffs on Norway, and how could they affect you?
Euro weakens, but not for long?
The euro dipped against the dollar following the trade news, but analysts say the euro still holds ground.
"I think the euro will continue to play a stronger role," Knudsen noted, citing consistent structural support from the eurozone and limited future upside for the dollar.
This dynamic has worked in favour of the Norwegian krone, which strengthened against the euro during Monday trading.
By late afternoon, one euro traded for 11.58 kroner – slightly lower than recent levels.
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Good news for the krone
Despite its dip against the dollar, the krone gained strength against a broader basket of currencies, especially in import-weighted indexes like I-44, which measure the krone's performance against Norway's key trading partners.
Since the euro holds more weight than the dollar in this context, the krone's gain is seen as positive.
It's more important for Norway that the krone strengthens against the euro than the dollar, Cekov said.
"The trade truce reduces recession risks, oil prices are rising, and risk sentiment has improved - all favorable for the krone," he explained.
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