USD/KRW: Two-way trade with geopolitical risk – OCBC
|OCBC strategists Sim Moh Siong and Christopher Wong note USD/KRW traded higher on heightened Middle East tensions and Oil gains, with Korean Won pressured as a higher-beta, net Oil importer currency. Bank of Korea (BoK) officials attribute recent KRW weakness mainly to external factors and portfolio rebalancing. The pair trades near 1488, with bearish daily momentum easing, and OCBC expects two-way moves within 1470–1500 as geopolitical developments remain fluid.
External shocks drive Won and range
"USDKRW traded higher amid heightened geopolitical tensions. No deal and a Trump blockade of the Strait of Hormuz added upward pressure to oil prices. Asian FX in particular higher-beta and net oil importer FX, including KRW traded on a softer footing. "
"Elsewhere, BOK Governor nominee Shin highlighted that the reasons behind KRW’s decline this time was different from late last year. This episode of KRW weakness was largely due to external factors, including rising oil prices and heightened risk aversion while portfolio rebalancing after strong gains in Korean stocks had also weighed on KRW. "
"The KRW’s weakness late last year was more driven by domestic factors including outbound investment flows by residents and uncertainties related to overseas investment. "
"Separately, he also highlighted that upward risks for inflation appear greater than the downward risks for the economy, based on the extent to which they are likely to deviate from current forecasts. "
"This is consistent with BOK Governor Rhee’s earlier comments that it is premature to respond with any policy adjustments given the uncertainty surrounding the war in Iran. If the shock proves temporary, the board would refrain from adjusting rates, but if it becomes persistent, a policy response may be warranted."
"USDKRW last seen at 1488 levels. Bearish momentum on daily chart intact but RSI shows signs of rising from oversold conditions. Two-way trades likely as geopolitical developments remain fluid. Support at 1475 (50 DMA), 1469 (100 DMA). Resistance at 1492 (38.2% fibo retracement of Mar low to high), 1500 (21 DMA)."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.