USD/KRW Outlook: The USD/KRW rate is likely to increase, supported by a recent tariff threat from the U.S. which has contributed to the dollar's strength above its recent average and at 90-day highs.
Key drivers:
- Rate gap: The Federal Reserve's expected shift to a neutral rate stance may pressure the dollar, but the ongoing tariff concerns bolster its current strength.
- Risk/commodities: Oil prices remain stable, providing some support for the dollar as it can impact the broader economy and trade relationships.
- One macro factor: Concerns over the Bank of Korea's inflation and its warning about the KRW's weakness add pressure on the won, contributing to its depreciation.
Range: The USD/KRW rate is likely to test recent highs, potentially pushing towards the upper end of its established range.
What could change it:
- Upside risk: A strong U.S. labor report could further strengthen the dollar.
- Downside risk: Effective government intervention in South Korea to stabilize the won could improve its value.
