The USD/KRW bias is bullish-to-range-bound, as the USD is above the 90-day average and trading in the upper half of the 3-month range.
Key drivers:
- The Federal Reserve's signals of potential interest rate cuts may create upward pressure on the USD, particularly if labor market data continues to show strength.
- Current oil prices are above average, prompting concerns that sustained high energy costs could weigh on the KRW and increase inflation worries in South Korea.
- The Bank of Korea's warning about a persistently weak KRW indicates potential intervention to stabilize the currency, which may limit its depreciation against the USD.
Range: The USD/KRW is likely to hold near current levels, with some potential to drift within the recent range of movement.
What could change it:
- Upside risk: A strong US labor market report could lead to further USD appreciation.
- Downside risk: Increased intervention by the Bank of Korea to stabilize the KRW could push the USD/KRW lower.