FX Daily: The won also rises
At a Glance
Lead — The commentary indicates a steady recovery in the Korean won, buoyed by domestic growth factors and structural improvements. Per the full note source, this shift comes amidst a broader calm in FX markets, in stark contrast to rising energy prices. Market anticipation is building ahead of tonight's FOMC minutes, which may clarify the Federal Reserve's direction, particularly as it relates to the short-term outlook on rates and the dollar. Current positioning appears to favor carry trades as volatility remains subdued.
Key Takeaways
- 01The Korean won's strong performance illustrates effective domestic economic strategies.
- 02Calm in the FX market ahead of significant FOMC minutes suggests a cautionary approach.
- 03Rising energy prices and tech stock fluctuations remain critical for market sentiment.
- 04The current data prints favor carry trades amid ongoing low volatility.
Full Analysis
What the desk is arguing
The desk suggests that the ongoing recovery in the Korean won reflects underlying economic resilience and specific domestic growth catalysts rather than merely a technical rebound. Per the full note source, the market moods surrounding FX remain steady, with traders eyeing potential insights from the upcoming FOMC minutes.
The assertion hangs on recent trends in yield movements and ongoing demand for 10- and 30-year U.S. Treasuries, which suggest that while higher yields have dampened some enthusiasm for growth stocks, it remains to be seen how much further these dynamics will lean into the FX space. Specifically, the performance metrics of the Philadelphia Semiconductor index are showing minor dips, pointing to market consolidation and potential FX stability in the immediate term.
Where it sits in our coverage
For EUR/USD, our current consensus target is 1.1600, with a range between 1.1200 and 1.2000. Notably, key forecasts include ing with a target of 1.1700 and morganstanley at 1.2000 for March 2026.
This view generally aligns with the broader market consensus, particularly as expectations converge around the Federal Reserve's cautious approach to policy normalization. The call sits within the higher end of the target spectrum, suggesting further upside may be limited unless convincing data emerges.
How other firms see it
A number of firms are currently aligned with this more optimistic stance on the won, with anz and deutschebank both forecasting moderate upside over the coming months. Conversely, firms like bofa and scotiabank show less confidence in the won's trajectory, reflecting a divergence in outlook.
The dynamics observed in USD/JPY also come into play, as the trajectory of the pair could mirror shifts expected from U.S. monetary policy adjustments influenced by the Federal Reserve's reports alongside the won's performance. Such interconnectedness highlights the broader FX landscape where movements may impact sentiment toward multiple currencies.
Market Implications
Given the proximity to FOMC minutes release, traders should monitor for any signs of changes in Fed hawkishness that could reshape the dollar's stance. Additionally, consolidation around the current levels in major pairs could signal readiness for tactical plays on the won and against the USD/JPY as economic narratives unfold.
EUR/USD — All Desk Targets
| Firm | Stance | YE 2026 |
|---|---|---|
UOB | Bullish | 1.1800 |
ING | Neutral | 1.1700 |
Rabobank | Bullish | 1.1800 |
From the original
Articles FX Daily: The won also rises Published 06:35 FX Share X LinkedIn E-mail Copy link Share X LinkedIn E-mail Copy link Download FX markets remain calm despite energy prices nudging higher and some weakness in semiconductor stocks. Expect further consolidation ahead of tonig
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The desk sees potential stabilization for Asian currencies as local authorities ramp up support measures amid ongoing market pressures, such as high energy prices and rising US rates. Per the full note, the Chinese yuan (CNY) showed signs of resilience with appreciation fueled by a strong trade surplus and tighter controls on capital outflows. This contrasts with the Korean won (KRW), which has faced significant volatility but is likely experiencing supportive measures from the Bank of Korea. Aimed at containing depreciation risks, these measures may lead to a more stabilized trading environment by summer, as local authorities respond to investor sentiment.
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