JPY: JPY/KRW Can't Sustain 9.6000 Handle, But Dips Likely To Be Supported

The JPY/KRW cross has failed to hold above 9.6000 in recent dealings (last near 9.5260). Moves above this level have not been sustained since Q3 2024, see the chart below. A clean break above 9.6000 could see the 9.7000 region targeted.  

• The pair remains above all key EMAs, the 20-day back close to 9.4500. The 100-day EMA is back near 9.2900, with dips sub this support level supported in the earlier parts of 2025.
• Relative macro backdrops between the two economies are still arguing for higher levels in this cross. This is best reflected through the lens of the relative central banks, with BoJ still in tightening mode, while BoK is in an easing cycle.
• The 1y1y Japan-South Korea yield differential is back to -160bps, against 2024 lows of -300bps.
• Next week we have the BoK decision, where a cut is expected by the sell-side consensus but uncertainty is higher given the BoK steady hand in Jan. For Japan most focus is likely to rest on the Feb Tokyo CPI print.
• In terms of broader macro drivers, a more aggressive trade conflict (that what we have seen to date) from the US would likely see yen outperform, given traditional risk/safe haven correlations.
• A trade deal between the US and China may see won outperform though and is a likely risk to a bullish JPY/KRW outlook. 

Fig 1: JPY/KRW Cross & Key EMAs