The USD/SGD pair initially fell during the day on Tuesday, but turned back around to form a bit of a hammer. The hammer of course suggests that there is buying pressure, as the buyers have gotten aggressive in every time we drop from here. In fact, we had a hammer on both Monday and Tuesday, so it appears that the market is ready to go higher. The 1.4250 level above is resistive, as we have seen over the last couple of weeks. Ultimately, this caused quite a bit of resistance back in August, and it makes sense that we should continue to see a reaction to this level.
However, I think that it’s only a matter of time before we break out above there, as we reach towards the 1.4350 level again. That area was the previous high, and as a result will be resistive again. Ultimately though, I do feel that this market breaks out above there as the US dollar is without a doubt the strongest currency in the world right now.
North America Versus Asia
I believe at this point in time the currency pair is essentially showing what the world thinks about the North American economic prospects versus the Asian economic prospects. After all, Asia is highly leveraged to the global economic growth, and with that it makes sense that the US dollar continues to strengthen against the Singapore dollar. I think that we will ultimately reach towards the 1.45 level, which of course is a large, round, psychologically significant number.
I think pullbacks at this point in time should be a buying opportunity as well, and that the 1.4150 level below should offer a bit of a “floor” at this point. Below there, I think the 1.40 level is even more supportive, so really at this point in time I don’t have a scenario in which I’m considering selling at this point. However, if we broke down below the 1.40 level, I would have to reconsider.
