Can ongoing AI sector demand support USD/KRW?

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US Dollar vs Won drops 0.51% today

Highlights

An 8% drop in USD/KRW earlier in Q2 was driven by significant institutional currency flows and Hynix ADR repatriation.
The Bank of Korea's July rate hike and robust AI sector demand increased the won's appeal versus the dollar.
USD/KRW trades below key moving averages with bearish momentum signals, targeting a range of ₩1,408 to ₩1,422 and high likelihood of further downside.

Currency flows and bank policy as drivers of won strength

Earlier in the second quarter, an 8% drop in USD/KRW was attributed to significant institutional currency flows driven by Hynix ADR repatriation and hedging adjustments at the National Pension Service, according to ING economists. The Bank of Korea's hawkish rate hike in July further enhanced the won's relative appeal by strengthening its monetary policy stance. Additional support for the Korean won came from ongoing AI sector demand, stability at the U.S. Federal Reserve, and higher volatility, as noted by Fxstreet.

Sustained bearish pressure as resistance holds amid oversold signals

On the hourly chart, USD/KRW is trading below its MA-20 at ₩1,421 and MA-50 at ₩1,422, with the price also well under the long-term MA-200 at ₩1,482. The Ichimoku Kijun is positioned at ₩1,422, currently acting as immediate resistance. RSI is at 38.31 and signals a sell, while both CCI and Bull/Bear Power are deep in oversold territory, indicating notable seller dominance. Momentum remains bearish, with MACD signaling a sell, ADX neutral, Stochastic RSI showing neutrality, and the Awesome Oscillator supporting the prevailing sell bias.

Limited rebound risk as downside bias dominates near term

Looking ahead to the next two to three trading days, USD/KRW is expected to fluctuate within a range of ₩1,408 to ₩1,422, aligning with typical volatility bands at current levels. The probability of an upward rebound is considered very low, while the likelihood of further downside is substantial. The central scenario projects a sideways movement unless resistance at ₩1,422 is decisively breached, which could open the door to a short-term rally; conversely, a move below ₩1,408 would signal a further bearish extension.

Anton Kharitonov, expert at Traders Union, notes that institutional flows and Bank of Korea policy have structurally shifted the tone in USD/KRW. He sees continued downward pressure, with strong technical resistance at ₩1,422 and little evidence of bullish momentum. As long as the pair remains below resistance, further downside remains more probable. "Until we see a clear reclaim of ₩1,422, I remain cautious and do not expect any meaningful rebound in the near term."

Earlier, analysts noted that US dollar inflows into Korea and mixed technical signals were contributing to range-bound trading for USD/KRW. The current setup signals a notable shift toward bearish momentum, with sustained downward pressure making a breach below ₩1,408 the key downside risk to monitor in the coming days.

Source of Data: USD Price Analysis by TU

The analysis is based on a proprietary model combining technical, on-chain, and expert data. Not investment advice. See methodology

The information is based on forecasts and does not constitute investment advice or a guarantee of future results. Market conditions may change. See our Disclaimer and Editorial Integrity for details.