The USD/SGD is challenging mid-term resistance levels, which likely have financial institutions in one of Asia’s most important financial hubs more than a little nervous. As of this writing the USD/SGD is near the 1.35580 mark and readers are encouraged to check this listed value against the live market price as they look at this article.
Economic data from China came in negative again today, adding to a list of concerns financial institutions in Singapore (and globally) have about the world’s second-biggest economy. Singapore banks have a lot of exposure to the Chinese Yuan (CNY) because of the close financial relationship which exists as trading partners between Singapore and China. The rise in the value of the USD/SGD is getting hit from two sides, which makes the bullish momentum of the currency pair potentially attractive to speculators who rely on behavioral sentiment.
USD-Centric Attitudes Potentially Taking a Backseat to China Worries in USD/SGD
Like any other major currency pair, the USD/SGD is largely USD-centric. However, the acknowledgement that banking exposure to the Chinese Yuan which is losing value will have a knock-on effect via holdings of the currency of financial institutions in Singapore is important. The resistance level of 1.35600 is crucial and if trading starts to sustain above this level it could ignite more buying of the USD/SGD.
- The 1.35700 to 1.35800 levels of the USD/SGD should be monitored.
- The USD/SGD has traded at higher levels before, and if a combination of risk-averse sentiment regarding recent U.S downgrades and China problems unite, this could cause a wave of buying in the USD/SGD as a safe haven move.
Bullish Momentum is Attractive but Remains Speculative for Day Traders
There are no sure things in day trading and the fact that momentary reversals are always taking place and knocking out traders using too much leverage is a constant danger. Betting on the upside momentum of the USD/SGD to continue in the near term may look quite attractive for speculators who rely upon behavioral sentiment. Yes, fundamentals and trading psychology can change fast with surprising economic results, but resistance levels in the USD/SGD have proven vulnerable since the middle of July.
Traders should not get overly ambitious if they decide to pursue upwards momentum and might want to let the market challenge technical support ratios before igniting long positions of the USD/SGD. Take profit orders should be used to capture momentum if it develops upwards, before a sudden reversal lower wipes out winnings.
Singapore Dollar Short-Term Outlook:
Current Resistance: 1.35650
Current Support: 1.35450
High Target: 1.35850
Low Target: 1.35200
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