South Korean Won: Strength backed by tech flows against US Dollar – Societe Generale

FXStreet Insights Team FXStreet

Societe Generale analysts highlight that the Korean Won (KRW) has gained 12% versus the Dollar year-to-date, with USD/KRW falling from around 1560 in June to below 1380. They argue the move looks stretched but is supported by AI and semiconductor optimism and large buyback-related Dollar selling, keeping USD/KRW a tactical sell on rallies with additional support from expected month-end exporter flows.

Tactical sell on rallies

"The KRW was one of the key beneficiaries in Asia of the "sell USD" theme post Liberation Day tariffs in 2Q25 when markets aggressively repriced US exceptionalism and USD/KRW retreated to 1350."

"In Asia, the KRW continues to lead performance among major Asian currencies, climbing 12% vs USD on a spot basis YTD."

"The move in USD/KRW from around 1560 in early June to below 1380 appears stretched but illustrates enthusiasm surrounding the AI and semiconductor sectors."

"Following the SK Hynix ADR-related dollar inflows in July, fresh support has emerged via sizeable buyback announcements from Samsung ($80bn) and SK Hynix ($28bn), with associated won conversion flows potentially generating additional dollar selling."

"USD/KRW remains a tactical sell on rallies in our view, boosted by anticipated month-end exporter dollar sales."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)

Author

FXStreet Insights Team

FXStreet

The FXStreet Insights Team is a group of journalists that handpicks selected market observations published by renowned experts. The content includes notes by commercial as well as additional insights by internal and external analysts.

AUD/USD holds above 0.6950 as bullish USD caps gains

AUD/USD edges lower during the Asian session on Tuesday, stalling a two-day recovery move from a two-month low, touched last week. An extended rout in the fixed income market keeps US bond yields elevated near multi-year highs. This, along with geopolitical uncertainties, helps the US Dollar retain its bullish tone despite receding October Fed hike bets. However, expectations for another RBA rate hike this month could act as a tailwind for the Aussie.

USD/JPY rises back above 158.00 despite hawkish BoJ outlook

USD/JPY rises back above 158.00 in the early European morning on Tuesday. The pair strengthens as the Japanese Yen fails to find any inspiration from hawkish BoJ expectations and looming intervention risks. Meanwhile, geopolitical uncertainty and elevated US bond yields keep the US Dollar near its YTD high despite receding October Fed hike bets. This, in turn, helps the pair stay supported.

Gold rebounds from two-month lows as US Dollar, Treasury yields retreat

Gold (XAU/USD) rebounds on Tuesday as a pullback in US Treasury yields weighs on the US Dollar (USD), helping the metal recover after falling to a two-month low of $4,104 during Asian trading hours. At the time of writing, XAU/USD trades around $4,173, up 0.82% on the day.

Ripple and Stellar weaken as derivatives positioning fades

Ripple (XRP) and Stellar (XLM) face pressure trading below $1.499 and $0.220, respectively, on Tuesday after a modest correction at the start of the week. Traders should be cautious as weakening derivatives metrics and fading bullish momentum suggest further corrections for XRP and XLM. Derivatives data shows a weakening and cautious signal among traders.

Europe in focus as French and Spanish politics drive sentiment

There are no tier-1 releases today. Focus will remain on developments in the European markets and geopolitical developments in the Middle East. In France, the key issue in the coming days will be whether the Socialists and Marine Le Pen's National Rally signal they are willing to topple the government over the budget.

Eurozone inflation just hit 3.8%, its highest in three years. This chart shows why the ECB can’t simply hike its way out

The ECB would normally have a relatively straightforward answer to inflation running almost twice its target: raise interest rates. But these are not normal circumstances. This time, the bond market is already doing part of the tightening for it, leaving the ECB facing an increasingly difficult dilemma.