The US dollar initially tried to rally against the Singapore dollar during the trading session on Wednesday as a 1.41 level caused a bit of hesitation. Ultimately, Wall Street traders started the narrative that they were going to look at this as “peak inflation.” Whether or not that’s true is completely irrelevant, because Wall Street tends to get a reaction together after an announcement like this, only to see a blow up in its face.
It’s worth noting that most of the US dollar weakness was found during the New York session, so I don’t know how much I read into it anyway. When you look at this chart, it’s been in an uptrend for quite some time, and I just don’t see how that changes. The 1.40 level underneath should be a significant amount of support as well, as it is a large, round, psychologically significant figure, and an area where we had seen previous resistance. Even if we were to break it down below there, I think the 1.39 level would also be an area that we need to pay attention to as the 50-day EMA is starting to reach that area.
Asia is struggling in general right now, so there will be a bit of a knock-on effect on Singapore. Having said that, Singapore is considered to be the “Switzerland of Asia” by a lot of currency traders, so it is a bit of a safety play as well. Maybe not so much against the US dollar, but against other currencies, it can be thought of in that vein.
Ultimately, this is a market that I think you should continue to buy on dips, therefore giving us an opportunity to find a little bit of value when it comes to the greenback, and ultimately the market almost certainly goes above the 1.41 handle, and perhaps even goes looking to the 1.4250 level. This being the case, I think it’s only a matter of time before value hunters join in, just as you will see in other currency markets around the world. After all, we have seen the Euro, Pound, and even the Japanese yen gain a bit against the US dollar after the narrative shifted. Longer-term trends remain, and that’s what you need to focus on when it comes to the Forex markets.
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