South Korean Won: Rally faces consolidation risk on policy week – OCBC

OCBC analysts Sim Moh Siong and Christopher Wong highlight a rally in the South Korean Won (KRW), with USD/KRW reaching 1380 amid exporter and corporate US Dollar (USD) selling and a weaker USD. While the domestic environment shows strength, with high exports and a trade surplus, risks such as elevated oil and US yields and the Bank of Korea's (BoK) and Jackson Hole event remain.

KRW continued its upward trend into Friday, hitting a low of 1380 for USD/KRW. The consistent support from exporter and corporate USD selling, along with a softer USD, might lead to a period of consolidation due to elevated oil and US long-end yields. The focus in the coming week will be on the Jackson Hole event, where shifts in Fed expectations or USD could influence the KRW's performance.

The Bank of Korea's Monetary Policy Committee (MPC) decision on Thursday will also be a key factor. Domestic attention centers on the BoK MPC decision. RSI is approaching oversold conditions, suggesting a potential near-term consolidation. Support levels are at 1380 (recent low) and 1375, while resistance levels are set at 1398 (76.4% Fibonacci retracement of the 2025 low to 2026 high) and 1406.

Other currency pairs, such as GBP/USD and EUR/USD, are also impacted by broader market trends and expectations. Gold prices have retreated from their initial gains but remain well above $4,600 per troy ounce, supported by a weak USD and moderate Treasury yields.