USD/KRW Outlook:
Slightly positive, but likely to move sideways as the rate is just above its 90-day average and within a stable trading range.
Key drivers:
- Rate gap: The Federal Reserve's decision to hold interest rates steady may keep the USD attractive; however, the Bank of Korea has expressed concerns over excessive KRW weakness, adding pressure to its performance.
- Risk/commodities: Oil prices are holding steady, which could support the USD against the KRW if volatility increases, impacting South Korea's import costs.
- One macro factor: The South Korean government's readiness to intervene to stabilize KRW volatility highlights ongoing economic challenges, influencing market perceptions.
Range:
Expect the USD/KRW to continue moving within its recent stable range, potentially holding steady around current levels.
What could change it:
- Upside risk: An unexpected increase in U.S. job growth could bolster the USD.
- Downside risk: Heightened geopolitical tensions that lead to a rapid increase in USD selling could pressure the pair lower.
