Bias: bearish-to-range-bound, with the pair below the ninety-day average and in the lower half of the three-month range, narrowing the upside potential.
Key drivers:
- Rate gap: The US policy path remains above THB yields for now, keeping USD supported as markets expect higher rates.
- Oil: Oil is above its three-month average and volatile, which tends to push the dollar higher as risk appetite shifts.
- Macro: The FPO sees the baht supported by a weaker US dollar and a strong current account, backing firmer Thai fundamentals.
Range: USD/THB is likely to drift within its recent three-month range, with occasional tests of the lower end as oil and US data drive flows and risk appetite shifts.
What could change it:
- Upside risk: stronger US data or a hawkish Fed tone could lift the dollar, widening the gap versus THB.
- Downside risk: softer US data or a clearer path to rate cuts could temper the dollar and allow THB to firm on improving risk appetite.
