Peso Outlook Clouds as USD/PHP Slide Looks Stretched FX

Key Moments

OCBC Flags Bearish Yet Stretched USD/PHP Positioning

OCBC’s Christopher Wong characterizes USD/PHP as maintaining a bearish bias but appearing oversold after the pair gapped sharply lower in the prior session in response to softer yields and weaker oil prices. The move has intensified focus on whether the recent downside in USD/PHP may be vulnerable to a corrective rebound.

BSP Policy Decision in Focus Amid Inflation-Growth Trade-off

Attention is turning to Bangko Sentral ng Pilipinas as policymakers confront a challenging mix of elevated inflation and moderating growth. Wong notes that inflation remains above target, with the latest reading at 6.8%, outside BSP’s 2-4% target range, even as economic momentum has slowed.

According to Wong, “This week’s focus shifts to BSP, which may face a tougher balancing act. Inflation is still too high (last print at 6.8%, outside BSP’s 2-4% target range), but growth has also slowed.”

Market expectations are tilted toward a 25bp rate increase, but Wong cautions that a more forceful response cannot be excluded: “Consensus is leaning toward a 25bp hike, but a larger 50bp move should not be ruled out given the risk that BSP risks falling behind the curve.”

Policy Scenarios and External Drivers for PHP

Wong outlines that a stronger policy stance from BSP, combined with continued softness in oil prices, could offer the Philippine peso a chance to regain ground: “A scenario of firmer policy response, alongside softer oil prices can help PHP recover some lost ground. Elsewhere, watch FOMC for any hawkish surprises that may upset momentum.”

This leaves PHP at the intersection of domestic monetary policy decisions and potential signals from the Federal Open Market Committee that could shift broader risk sentiment and dollar dynamics.

Technical Picture: Oversold Signals and Key Levels

From a technical perspective, Wong highlights that “Momentum is bearish while RSI looks oversold. Risk of snapback should BSP disappoints or external environment turns.” The suggestion is that positioning may now be stretched enough that an unfavorable policy surprise or a shift in global conditions could trigger a rebound in USD/PHP.

These levels frame the near-term trading range, with downside support at 60.10 and upside resistance initially at 60.72, followed by the 61 area aligned with the 50-day moving average.