USD/KRW retreats after South Korea inflation data: more upside?

October 05, 2023 11:01 AM AEDT | By Invezz

South Korea inflation data

The USD/KRW pair retreated as the US dollar index (DXY) lost momentum. After soaring to a high of $107.34 on Tuesday, the index has retreated to $106.50. This retreat happened after the latest private payrolls data by ADP. Numbers showed that the private sector added just 89k jobs in September, the lowest increase in months.

Additional data shows that the services PMI declined to 50.1 in September as it approached the contraction zone. These numbers, together with the falling crude oil price, helped push bond yields downwards. Therefore, there is a likelihood that the Fed will consider pausing its interest rates.

The next key catalyst for the US dollar index will be the upcoming US non-farm payrolls (NFP) data scheduled for Friday. Economists expect the data to show that the unemployment rate remained at 3.7% as the economy created ~160k jobs.

The USD/KRW exchange rate pair retreated after the strong South Korean inflation data. According to the statistics agency, the headline consumer price index (CPI) dropped from 1.0% in August to 0.6% in September. The decline was higher than the median estimate of 0.3%.

South Korea’s inflation jumped to 3.7% on a year-on-year basis, higher than the median estimate of 3.4%. This increase was higher than the median estimate of 3.4%. The country’s inflation rose as the price of crude oil rose.

The soaring inflation means that the Bank of Korea will decide to maintain a hawkish tone in the coming months.

USD/KRW technical analysis

USD/KRW chart by TradingView

The USD/KRW exchange rate pulled back after the latest South Korea inflation data. It retested the important support at 1,345, the highest point in August and May this year. It has remained above the 50-day moving average while the Relative Strength Index (RSI) has continued soaring. The pair has formed an inverted head and shoulders pattern.

Therefore, the outlook for the pair is bullish, with the next key resistance level to watch will be at 1,375. The stop-loss of this outlook will be the 50-day moving average at 1,330.

The post USD/KRW retreats after South Korea inflation data: more upside? appeared first on Invezz.

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