Morgan Stanley
2026 FX Outlook: The Year of Pivots
LIVE20 November 2025USD bearish
Back to CurrenciesBullish
USD/NOK
Undervalued and under-owned
MS Forecast Path
Cross-Firm Forecast Comparison
Key Drivers
Oil prices
Norges Bank policy
European growth
Valuation
Capital flows
All Firm Targets (Dec '26)
GSBullish9.50
JPMBullish9.42
MSBullish9.40
MUFGBullish9.40
BARCBullish9.40
BofABullish9.35
DBStrongly Bullish9.15
INGVery Bullish9.10
Key Issues for 2026
1.NOK is the most undervalued G10 currency on REER basis
2.Norges Bank on hold at 4.5% maintains high yield appeal
3.Oil price stability above $70 supports Norwegian fiscal position
4.European growth spillover benefits Norwegian exports
5.Capital flow picture improving as NOK pessimism peaks
Risk Scenarios
Bull case9.00-9.20
Oil above $85 + European growth boom + Norges Bank hawkish
Base case9.40-9.60
Oil stable, European growth broadens, carry intact
Bear case10.50-11.00
Oil collapse below $60, European recession, risk-off
Analysis Summary
NOK undervalued and set to benefit from oil price stability, Norges Bank on hold, and European fiscal expansion. EUR/NOK to decline toward 9.40 by year-end. High yield status in G10 is a structural positive.