The USD/SGD has seen a short-term bullish move higher, and this opens the door for speculators who may want to look for reversals.
Before going into the weekend, the USD/SGD climbed higher and even penetrated the 1.33000 level, and actually hit the 1.33390 mark. The move upwards occurred as risk appetite became cautious throughout the global markets and equity indices declined. However, in early trading this morning, the USD/SGD has retraced slightly downwards, and this has happened as Asian stock exchanges have turned in positive results.
The long-term bearish trend of the USD/SGD has not disappeared and the movement higher before going into the past weekend could prove a solid opportunity for speculators. Yes, it is entirely possible that the USD/SGD could produce additional momentum upwards and test resistance levels it traversed in the first week of February. However, if a glimmer of risk appetite continues to rise and financial institutions show a willingness to be buyers on equity indices, there is a chance the USD/SGD could resume its rather bearish pace.
Astute investors may skeptically ask how the USD/SGD can suffer more declines if equity markets are rising in Singapore and other Asian nations. Simply put, the USD remains on a weaker footing long term because the US Federal Reserve is keen on maintaining lower interest rates. From a technical standpoint, the ability of the USD/SGD to climb the past couple of days offers a chance to look for reversals downward, which reestablishes the move towards the 1.32000 mark below.
From a risk/reward perspective, considering the long-term trend of the USD/SGD, the notion that a sudden shift in the value trend has begun seems unlikely. The recent move upwards by the USD/SGD should be considered a temporary cyclical move, one which will run out of power sooner rather than later. Speculators who believe there is more room to seek upwards value are cautioned to use stop losses wisely to protect their cash.
Selling the USD/SGD seems like a logical move at its current value. Conservative traders may want to place limit orders higher and try to capture moves lower which occur when resistance levels are tested. However, if the 1.32900 mark above proves it is durable and fights off climbs above, shorting the USD/SGD may prove a worthwhile speculative wager now.
Singapore Dollar Short-Term Outlook:
Current Resistance: 1.33070
Current Support: 1.32830
High Target: 1.33480
Low Target: 1.32490