USD/KRW remains subdued near 1,391 following US-Korea trade agreement

• USD/KRW holds losses after Seoul and Washington finalized a trade deal.
• The US-Korea deal includes a 15% US tariff on imports from South Korea.
• Traders await US Personal Consumption Expenditures (PCE) - Price Index data, due on Thursday.

USD/KRW depreciates after registering gains in the previous session, trading around 1,391 during the Asian hours on Thursday. The pair inches lower as the South Korean Won (KRW) receives support after Seoul and Washington finalized a trade agreement.

US President Donald Trump announced a new trade deal with South Korea, imposing a 15% US tariff on imports from South Korea. The agreement also includes a $350 billion commitment from South Korea toward US-owned and controlled investments. However, South Korean President Lee Jae Myung said the funds are aimed at supporting Korean firms expanding into the US markets.

The ruling Democratic Party welcomed the agreement, highlighting reduced tariff pressure, while the opposition People Power Party voiced concerns over the potential economic burden stemming from the deal. Meanwhile, South Korean business groups expressed support for the trade deal with the US, noting that it would help ease uncertainty surrounding Korean exports.

However, the USD/KRW pair gained support as the US Dollar (USD) advanced after the Federal Reserve (Fed) decided to hold its benchmark federal funds rate in a range of 4.25%-4.5% at its July meeting on Wednesday, as widely expected.

Traders shift their focus toward the US Personal Consumption Expenditures (PCE) - Price Index, due on Thursday, which is expected to accelerate slightly. On Friday, Nonfarm Payrolls (NFP) is expected to hold in positive territory, which could add further fuel to rate hold fears.