The US dollar has pulled back just a bit during the trading session on Friday against the Singapore dollar, but we are still relatively strong looking, as the market has recaptured about half of the losses. By forming the candlestick that we have, it is possible that we may go looking towards the 1.36 level again. That was an area that has been resistance a couple of times, so if we can break above there, then it could open up a move towards the 1.3750 level.
Keep in mind that the US dollar will be favored over the Singapore dollar for interest rate differential, but it is also worth noting that we have just formed a bit of a “W pattern”, so if we do break out to the upside the so-called “measured move” is for at least 1.3750, possibly 1.38 given enough time. The US dollar continuing to rally a bit suggests that we are likely to continue to see the push to the upside going forward.
That being said, you should also take a look at the 200 day EMA sitting just below, with the 50 day EMA starting to break back above there, and that is another momentum indicator that a lot of people will be paying attention to. If we were to break down below there, then it is possible that we could go looking towards the 1.34 handle underneath. The 1.34 handle underneath has been a massive support level multiple times, as you can see over the course of the last month or so. By launching the way we have, it does suggest that we are trying to continue going higher over the longer term.
If for some reason we were to break down below the 1.34 handle, then that could open up a move down towards the 1.32 level, maybe even down to the 1.30 handle. In general, this is a market that will continue to be very noisy overall. That is going to be true with almost anything that you are trading right now considering that the entire world is on edge about the Ukraine situation, and the potential global slowdown due to massive inflation. With this, the US dollar is more than likely going to be the favorable currency in this picture, but we may need to pull back a couple of times to stabilize before we go higher.
