USD/PHP Bearish but Oversold, Snapback Risk – OCBC

OCBC currency strategist Christopher Wong sees USD/PHP as bearish but oversold following a sharp gap lower. The move was triggered by softer bond yields and declining oil prices.

However, Wong cautions that the pair is at risk of a snapback. The Philippine peso's strength may be tested as Bangko Sentral ng Pilipinas (BSP) navigates a challenging environment: inflation remains above target while economic growth is slowing. A more aggressive policy response from the BSP could further support the peso, but the central bank faces a difficult balancing act.

The outlook for USD/PHP remains tilted to the downside in the near term, but the oversold condition warrants vigilance against a sharp reversal.