USD/KRW Outlook: Slightly positive, but likely to move sideways, as the rate is above its recent average but lacks a clear driver.
Key drivers:
• Rate gap: The Federal Reserve is expected to implement one to two rate cuts, creating downward pressure on the US dollar compared to the Bank of Korea's focus on supporting the KRW.
• Risk/commodities: Oil prices are fluctuating, and a stable or rising trend in oil could support the KRW indirectly through improved trade conditions, affecting the dollar's demand.
• One macro factor: Concerns from the Bank of Korea about the weak KRW impacting domestic inflation suggest that intervention measures may soon emerge.
Range: The USD/KRW is likely to hold within its recent range of approximately 1426 to 1481, maintaining stability in the near term.
What could change it:
• Upside risk: A surprising inflation reading from the US could lead to a pullback in Fed rate cut expectations, boosting the dollar.
• Downside risk: Increased volatility in the foreign exchange market, driven by external geopolitical tensions, could pressure the KRW lower.
