The Korean won stayed under pressure as foreign selling of Korean equities persisted, with elevated US yields after the FOMC adding to the drag even as overnight conditions softened. Foreign investors sold a further KRW2.3tn of KOSPI shares on Thursday, and cumulative selling rose to about KRW14tn over the past seven sessions. Large-cap technology stocks continued to anchor the outflows, while the broader KOSPI proved comparatively resilient.
Externally, UST yields and the USD eased from post-FOMC highs, and lower oil prices provided some relief, which could limit near-term upside in USD/KRW. Technical indicators still point to bullish momentum, although the RSI is moderating after the recent rise. Support is seen at 1373 and 1365, the latter aligning with the 21 DMA; resistance sits at 1387, the 23.6% Fibonacci retracement of the July-to-September fall, and at 1410, which matches the 38.2% Fibonacci level and the 50 DMA. A more durable KRW recovery, however, would likely require foreign equity selling to slow.
Strategic Positioning In USD/KRW Derivatives
We recommend that derivative traders position for a volatile, range-bound USD/KRW in the coming weeks by utilizing call spreads. With daily charts showing bullish momentum but easing indicators, we should target immediate resistance at 1387 and key support at 1373. Historically, when cumulative foreign equity outflows reach these high levels, USD/KRW struggles to break significantly lower without a clear reversal in stock positioning.
Equity Outflows, Tech Weakness, And Opportunity In Energy Trends
Given that foreign investors recently dumped 14 trillion won of KOSPI shares in just seven sessions, shorting tech-heavy KOSPI 200 futures remains a highly viable play. Since large-cap technology stocks are bearing the brunt of these outflows, buying near-term put options on major tech indexes can hedge broader portfolio downside. This intense equity selling suggests that local tech sector weakness will likely persist until foreign flow data stabilizes.
We also need to closely watch US Treasury yields and oil prices, as their recent softening is currently capping the dollar’s upward march. Derivative traders can exploit this temporary breathing room by selling out-of-the-money USD/KRW strangles, capitalizing on the expected consolidation between the 1365 and 1410 levels. Historically, a stabilizing energy market helps resource-dependent South Korea, meaning any further drop in crude could present a prime opportunity to slowly accumulate won call options.
