Bias: The USD/KRW is currently bullish-to-range-bound as it sits above the 90-day average and within the upper half of the 3-month range.
Key drivers:
• The Federal Reserve is expected to consider rate cuts in the coming years, which may support the US dollar now but could lead to longer-term weakening.
• The recent surge in oil prices could impact South Korea's trade balance, affecting the KRW as it typically relies on imports for energy.
• The South Korean government is poised to take action to stabilize the won in light of the recent volatility, which could influence currency strength.
Range: The USD/KRW is likely to hold steady but may drift towards testing recent highs in the forthcoming weeks due to the combination of market developments.
What could change it:
• An unexpected increase in US interest rates could boost the USD further.
• Heightened geopolitical tensions or unfavorable economic data from the US could lead to a decline in the USD's strength against the KRW.
