The Norwegian crown has been rising against the Swedish currency since January, and technical analysis indicates that this trend could continue.
The Norwegian currency's advance has been fueled by the disparity in monetary policy, with Norway's central bank - concerned about inflation - taking a less accommodative stance than Sweden's.
Norway's crown rose above an important downtrend line in February, which has provided momentum for the upward move. A downtrend line connects a set of declining peaks that mark an extended fall in prices. Breaking above this line is seen as bullish.
More recently the Norwegian currency has risen above important Fibonacci retracements, which are calculations that traders use to highlight areas where a market might pause, reverse, or find support after a move up or down.
The Norwegian currency has recently been trading around 1.0017 per Swedish crown, according to LSEG data, and its gains indicate that it is now targeting a Fibonacci retracement at 1.0348.
However, a fall below 0.9966 would raise doubts about the positive outlook, and a drop back below the downtrend line at 0.9234 would suggest the move higher is over.
The key question, as with many markets, may be the drive for a resolution to the Iran war, since Norway's status as an oil exporter has bolstered its currency during the conflict.
What the chart shows:
(Daily markets commentary from Reuters analysts on the signals financial charts are sending - and what they might mean.)
