The USD/KRW has dipped 0.1% to 1,371.15, continuing its recent downward trajectory as foreign investors reduce their exposure to South Korean equities.
The decline suggests that traders are betting on a continued cautious stance from the Bank of Korea.
With no immediate signs of intervention, the won is vulnerable to further downside pressure, especially if China’s recovery falters.
On the other hand, any concrete, more substantial stimulus from China could bolster the won and reverse the outflows.
Picture: USD/KRW climbs to 1368.15, with bullish momentum slowing as traders watch for resistance near 1371.41 as seen on the VT Markets app.
The USD/KRW closed at 1368.15, reflecting a 0.44% increase during the session, with price action fluctuating between a low of 1362.2 and a high of 1370.29.
The moving averages (5, 10, and 30-period) indicate a short-term bullish trend, with prices trading above these averages for most of the session.
However, the MACD shows bearish divergence as the MACD line dips below the signal line, with negative histogram bars expanding. This suggests that the pair may face a potential pullback in the near term.
USD/KRW’s movement has been largely influenced by global risk sentiment and dollar strength.
Recently, the US dollar has benefited from strong US economic data and Federal Reserve signals hinting at a more cautious approach to rate cuts, supporting the dollar against risk-sensitive currencies like the Korean won.
On the other hand, geopolitical tensions in Asia, particularly involving China, could also play a role in the won’s weakness.
See also: Dollar Lifts, Asia Awaits China Housing Policy
Additionally, South Korea’s latest export data reflects challenges as global demand slows, further pressuring the won.
This shift in sentiment follows disappointment over China’s stimulus measures, which have failed to lift market confidence.
South Korean traders are becoming increasingly sensitive to China’s economic decisions due to the country’s close trading ties and reliance on Chinese demand for exports, especially in key industries such as semiconductors and shipbuilding.
The broader picture reveals a softening Korean won amid these concerns, with foreign outflows accelerating as traders look for safer havens.
The weakness in the Korean won reflects market caution over whether China’s property sector support will be sufficient to revive its economy.
This raises concerns about demand for South Korean exports, which are heavily tied to Chinese growth. The outflows from South Korean stocks, particularly in sectors like technology and heavy industry, further weigh on the currency.
We expect continued volatility in the pair as market participants keep a close eye on developments in China and any shifts in risk sentiment globally.
If China’s economic revival shows real signs of traction, we may see some relief for the won. However, for now, the pressure remains on the downside for the South Korean currency.
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