The USDKRW currency pair continued higher, rising above resistance at 1,188.50 during the Asian session as consumer prices moderated in the Asian economy.  According to Statistics Korea today, consumer inflation rose less than expected, gaining by 4.5% in September.  The figure is markedly lower than the 5.3% jump in August and is the first slowdown in the last couple of months for the report.

Today’s results dampen previous speculation that the country’s central bank will raise interest rates – a sentiment that has been hovering over the currency pair since the beginning of the year.  But, with inflationary pressures slowing a bit as we head into year end, the likelihood of a rate hike at this point continues to dwindle.  The decision is also being held back by concerns over the current global slowdown and the short term future of the European Union.

These factors will continue to support a higher USDKRW currency rate in the short term, a sentiment that is conducive with the technical picture right now.  With a flag formation percolating in the 5-minute time frame, bulls will look for a break above the 1,190.00 resistance barrier before adding or initiating long positions.  But, if an equally likely break lower, the USDKRW is likely to retrace a bit, falling to initial support at 1,186.65.