The USD/SGD is near 1.37050 as of this writing, as the currency pair battles resistance levels it has essentially tested since Thursday of last week. While some other major currency pairs have shown an ability to traverse a bit lower and developed signs that financial institutions want to believe the USD has been overbought, the USD/SGD continues to linger near important higher realms. In early October the USD/SGD traded above the 1.37500 from the 3rd until the 4th.
Broad market conditions globally remain nervous because the U.S. Federal Reserve is casting a shadow and investors are bracing for another interest rate hike on the 1st of November. However, the USD/SGD is also likely dealing with complications regarding China's economic conditions which are showing signs of weakness and causing problems for financial institutions in Singapore carrying the Chinese Yuan.
While the mechanics of trading exposure to the Chinese Yuan in Singapore are not entirely clear, the USD/SGD may be feeling some knock-on effects from nervous behavioral sentiment which combines China’s economic problems with those of the U.S. Today the U.S will release its Retail Sales data and the numbers will impact Forex if there are major surprises. There is plenty of important China economic data this week too including GDP results.
1.37000 Support Level Tempting for USD/SGD but Problematic
Sometimes traders can get too focused on a particular price level and believe it ‘must’ be attacked. The 1.37000 level below looks attractive as a short-term target for sellers, but speculators need to also be careful and not overly ambitious. The fact that choppy conditions have been causing volatility in the USD/SGD since the middle of July should not be forgotten, and traders should not forget the overwhelming trend has been bullish. Traders likely believe the USD/SGD is overbought, but it remains dangerous to bet against the mid-term trend while hoping for a sudden and sustained reversal lower.
- Resistance near the 1.37125 mark should be watched, if it proves vulnerable upwards it could signal more buying is going to be seen in the near term.
- Traders may want to be accustomed to the notion the USD/SGD is within a choppy range. The highs around 1.37500 seen in early October may prove to be powerful resistance and below the 1.36950 mark remains rather technically impressive as support in the near term.
Broad Market Conditions Globally are Affecting the USD/SGD
Traders need to be careful. Global market conditions remain nervous regarding U.S. Treasury yields. While gold has gone up, it may have done so because of risk-adverse buying instead of a belief the USD is suddenly going to create a sustained move lower. Risk management is essential for SGD/USD traders today.
Singapore Dollar Short-Term Outlook:
Current Resistance: 1.37125
Current Support: 1.37010
High Target: 1.37400
Low Target: 1.36935
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