The USD/SGD has continued to drift higher the past handful of days and has broken rather intriguing resistance this morning as the currency pair’s value tested two-month highs.
The upwards climb in the USD/SGD has continued and the price range of the currency pair is curiously high. As of this writing the USD/SGD is near the 1.34300 mark, which is a height not seen since the 20th of March. The ability of the currency pair to continue an upwards drift is curious and calls into question a couple of dynamics.
The USD/SGD was trading near the 1.32270 level on the 10th of May. After touching this low, which came within sight of lows created around the 13th of April, the price velocity in the USD/SGD has been fairly dynamic in the past week of trading. While consideration has to be given to the potential of nervous behavioral sentiment in the global marketplace, and the idea that international trade may dampen because of recessionary forces this doesn’t explain the entire move upwards.
The U.S Federal Reserve is being watched but Clarity is in Short Supply for USD/SGD Traders
The USD has done relatively well in the past few days of trading against many major currencies. While U.S. data has shown some signs of weakness, financial institutions remain nervous about the intentions of the U.S. Federal Reserve’s actions in June regarding interest rate policy. The USD/SGD climbed above the 1.34000 ratio in early trading this morning and found a fast renewed boost of buying when the value was sustained.
- Bearish USD/SGD traders who want to pursue the potential of downward reversals cannot be blamed, but the short-term trend upward has been steady.
- Some technical traders may interpret the buying momentum demonstrated early today as being overdone, but speculators are advised to use solid risk management if they are going to pursue selling positions because this is a dangerous endeavor.
Risk Adverse Trading in the USD/SGD is Potential Happening, but Questions Remain
It is contrarian to look at a week-long trend upward and say that a currency pair needs to decline. The USD/SGD certainly has provided bullish traders with a rather solid week and a half of gains. Timing a reversal lower can be a dangerous and costly endeavor. However, traders who believe the USD/SGD has been overbought cannot be blamed entirely. U.S. economic data has not been overly positive, and while inflation remains stubborn it has shown slight signs of slowing down.
Financial institutions may be positioning risk-averse tactics by buying the USD/SGD, but questions remain regarding their commitment to the buying side. Traders who want to look for downside reversals should not be overly ambitious and use solid take-profit orders. Choppy conditions may start to develop in the USD/SGD in the near term if some large trading houses begin to think the upwards momentum in the currency pair is overdone.
Singapore Dollar Short-Term Outlook:
Current Resistance: 1.34425
Current Support: 1.34040
High Target: 1.34585
Low Target: 1.33760
Ready to trade our Forex daily forecast? We’ve shortlisted the best FX trading platform in the industry for you.