The USD/SGD hit a low of nearly 1.34845 yesterday, which was a depth not seen since the 1st of September. As of this writing the USD/SGD is near the 1.35450 ratio having experienced a reversal higher after the strong selling of the currency pair, which started late on Wednesday of last week and culminated into Monday the 6th of November. However, while a reversal has been seen higher, resistance around the 1.35550 mark appears to be important in the short term and if it proves durable could ignite another round of selling.
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Risk appetite has shown signs of life the past handful of days, this has occurred after the U.S Federal Reserve held its interest rates in place on last Wednesday, and this was followed by Friday’s weaker than anticipated U.S jobs numbers. The USD/SGD was trading at a high of nearly 1.37500 on the 19th of October. And while the currency pair is certainly trading lower now, the path to achieving yesterday’s depths has not been without battles. Speculators have endured a difficult road in order to challenge key support levels in the USD/SGD, and more volatile dynamics are almost guaranteed.
Perception of USD/SGD being Overbought Remains but with Speculative Concerns
USD/SGD technical traders and perhaps fundamental speculators have been looking at charts of the currency pair and likely have come to the conclusion the Forex pair has been overbought over the mid-term. While key support levels are now in sight, USD/SGD traders are likely looking beyond three month charts and considering six month charts to look for targets below in the near-term. Bearish attitudes cannot be blamed, but speculators should remain cautious. U.S Treasury yields will continue to affect sentiment. A decline in yield of U.S bonds could be a trigger for more USD weakness.
However, dangers remain abundant in the USD/SGD not only because of global risk adverse conditions and U.S economic concerns remain vulnerable, but because economic conditions in China are also problematic. Singapore’s financial institutions are still exposed to risk regarding their holdings of CNY (China Yuan). China’s trade balance numbers were published earlier today and were weaker than anticipated. China will publish important inflation data Thursday via its Consumer Price Index. Weakness in the CNY could spur reactions from Singapore financial houses which seek the safety of the USD.
USD/SGD in the Near-Term and Price Range Considerations
- The lower move in the USD/SGD was fast from Wednesday of last week into yesterday’s results. Traders need to use their risk management wisely.
- Traders of the USD/SGD should anticipate reactionary reversals as financial institutions look for equilibrium in the near-term.
- Important psychological support around 1.35250 could prove vital technically; if this level is challenged and proves vulnerable further selling may ignite.
- Resistance around 1.35620 in the short-term should also be watched, if it is penetrated higher a test of 1.35800 to 1.35900 may attract wagers.
Singapore Dollar Short-Term Outlook:
Current Resistance: 1.36620
Current Support: 1.36500
High Target: 1.36985
Low Target: 1.36190
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