The US dollar fell on Monday, as there was a little bit more of a “risk-on-appetite-driven rally” in all things not the greenback. That being said, we still have a lot of concerns out there and it is most certain that the Federal Reserve will be tightening monetary policy. Because of this, the US dollar has had a little bit of a buffer against several other major currencies. However, in the Lion City, things are just a bit different.
After all, the Monetary Authority of Singapore has already raised interest rates. That part of why you seen the US dollar fall against the Sing dollar, as higher interest rates attract more trading and investing. At this point, the market is hanging just above the 200 day EMA, after slicing through the 50 day EMA during the trading session. This is a somewhat outsized day, but it should also be noted that there was an equally expressive candlestick last Thursday in this pair that still has to be dealt with. Because of this, I think that at best we are looking at a move down towards the 1.34 handle, an area that has been very important previously.
If we were to somehow break down below the 1.34 level, it would be an extraordinarily bullish sign for risk appetite in general. That would make the Singapore dollar very strong, and it would show money leaving the safety of the greenback. Having said that, it should be noted that the Singapore dollar is considered to be somewhat of a safety asset itself. Think of Singapore as the “Switzerland of Asia.” On the other hand, if we break above the highs of the candlestick from Friday, then that could have the US dollar looking towards the 1.36 level, an area where we have seen a lot of noise previously from both the support and resistance side of the equation. After that, then the market could go looking towards 1.37 level.
Regardless, keep in mind that there is quite a bit of volatility out there in all assets, and sooner or later when things get dicey enough out there, it will certainly show itself here. While the Singapore dollar is somewhat tightly controlled and considered to be a safety currency, nothing operates perfectly in a vacuum when it comes to financial markets.
