USD/KRW rose as Middle East tensions increased and oil prices climbed, which weighed on the South Korean won as a higher-beta currency and a net oil importer. Bank of Korea officials linked the recent won weakness mainly to external shocks and portfolio rebalancing after strong gains in Korean equities.
They contrasted this with late last year, when won weakness was tied more to domestic factors such as residents’ outbound investment flows and uncertainty linked to overseas investment. They also said inflation risks appear more tilted to the upside than downside risks to the economy, relative to current forecasts.
Policy comments pointed to caution while uncertainty around the war in Iran remains. If the shock is temporary, the Bank of Korea board may avoid rate changes, but a more lasting shock could lead to a policy response.
USD/KRW was last near 1488, with bearish daily momentum still in place while RSI was rising from oversold levels. The pair is expected to move both ways within 1470–1500, with support at 1475 (50 DMA) and 1469 (100 DMA), and resistance at 1492 (38.2% fib retracement) and 1500 (21 DMA).
The USD/KRW has moved higher due to rising Middle East tensions and the resulting spike in oil prices. As a net oil importer with a currency sensitive to global risk, the Won has naturally come under pressure. These external factors are the main drivers of the current exchange rate.
We’ve seen Brent crude futures for June delivery push past $112 a barrel this month, which directly impacts our economy. This supports the central bank’s view that inflation risks are growing, especially after the latest March data showed consumer prices rising 3.8% year-over-year. The portfolio rebalancing mentioned also makes sense, following strong gains in the KOSPI index during the first quarter.
This situation is very different from what we experienced in late 2025. Back then, the Won’s weakness was driven more by domestic factors like outbound investments by residents and uncertainty around overseas assets. Today, the story is almost entirely about global geopolitics and commodity prices.
The Bank of Korea has signaled it will not make any sudden policy adjustments, preferring to wait and see if the current shock is temporary. Governor Rhee has made it clear that a policy response would only happen if these external pressures become persistent. This means we should not expect interest rate changes to influence the currency in the immediate future.
For the coming weeks, this points to the pair trading within a defined range, likely between 1470 and 1500. This environment is ideal for strategies that benefit from sideways movement, such as selling out-of-the-money puts and calls. Expecting a major directional breakout seems unlikely given the current balance of factors.
Traders should watch the technical levels closely as the pair moves within this range. As USD/KRW approaches the resistance near 1500, buying puts or establishing short positions could be effective. Conversely, approaching the support zone around 1470-1475 presents an opportunity to buy calls, especially as daily charts show momentum is shifting away from extremely bearish conditions for the Won.
