September 25, 2023

Dollar vs Philippine peso analysis (USD/PHP) 


Since mid-July, the US dollar (USD) has been on a steady ascent against the Philippine peso (PHP), recently reaching its highest level since November 2022. 

This surge in the USD’s value has been driven by a combination of factors, including soaring crude oil prices and an uptick in US Treasury bond yields, casting a shadow over the PHP’s stability.

Consequently, the USD gained more than 4.3% against the Philippine peso over the past six months, with the currency pair trading at 56.77 at the time of writing on September 19.

USD/PHP 6-month chart. Source: TradingView

With its recent upswing, the greenback cleared the resistance barrier at around 56.5 on the daily chart, which now acts as a support zone. A daily close below this threshold would pave the way for further declines toward the next support located at around 55.07

Why is the USD gaining ground against PHP?

The Philippine peso lost pace against the US dollar for the fourth consecutive trading day on September 18 prior to important monetary policy meetings both in the Southeast Asian country and the United States later this week. 

Michael Ricafort, chief economist at Rizal Commercial Banking Corp., said markets are currently expecting policymakers to pause rate hikes in both nations.

“However, the peso exchange rate still somewhat supported vs. the US dollar recently… as signaled by some local monetary authorities last month about the option of intervention in the local market if necessary, in an effort to stabilize the peso exchange rate.”

– Ricafort said.

From a broader perspective, the recent declines in the peso can be attributed to rising oil prices and mounting US Treasury bond yields. Crude oil prices recently reached a 10-month high, with some predicting a further ascent to $100 a barrel. 

USD/PHP technical analysis

The greenback’s momentum versus the Philippine peso is confirmed by the majority of technical indicators.

Namely, the 1-day gauges over on TradingView are recommending a buy’ for the USD/PHP pair, based on 13 indicators indicating a ‘buy,’ 10 showing a ‘neutral’ rating, while just 2 signal a ‘sell.’

USD/PHP technical analysis overview. Source: TradingView

Moving averages (MAs) appear to be the most bullish among indicators, indicating a ‘strong buy’ for USD/PHP. Meanwhile, oscillators are mainly bearish on the pair, showing a ‘sell’.

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