Early trading this morning and yesterday has seen some buying take place within the USD/SGD, this after lows were touched on Friday which saw values last seen on the 10th of April.
- The USD/SGD has inched higher in early trading this morning continuing a path which began on Monday after a strong amount of selling had been demonstrated last week.
- The USD/SGD is now trading near the 1.35610 mark which essentially still has higher values within sight.
- However, the 1.35600 level is clearly an important psychological ratio for technical traders and financial institutions.
- A simple look at one, three and six month charts shows the ratio has only seen limited trading above the 1.35600 during limited stretches of time.
While strong selling was seen last week which took the USD/SGD back below the 1.35600 level, the largest amount of impetus downwards occurred just before the weekend when the U.S jobs numbers came in weaker than expected. However, buying which started to develop on Monday and has lasted into early today may indicate financial institutions believe selling got ahead of fundamentals. Will the buying now run of power short-term?
Speculative Range in the USD/SGD
Traders will now get to decide if speculative notions about the USD/SGD being in territory which appears overbought will again produce selling momentum in the near-term. There will be a lack of significant data from the U.S today, and while weekly Unemployment Claims will be released tomorrow, it is only on Friday when the University of Michigan Inflation Expectations has a real chance of causing a sizeable shift in behavioral sentiment again. Until Friday, the USD/SGD is likely to test its existing price range.
The 1.35600 component within the USD/SGD is going to remain important in the short-term. Resistance levels should be watched near the 1.35680 vicinity, if this level is tested it may cause some temporary buying which produces a challenge to the upper elements of the USD/SGD range. However, it does feel from a speculative viewpoint when fundamentals are considered that trading within the 1.35700 to 1.35800 levels will be viewed as overbought again in the currency pair.
Worst of the News in for Inflation and the USD/SGD
While inflation remains the ugly word in the mix causing flourishes of buying on occasion in the USD/SGD, some financial institutions may believe they now have a grasp on what will be the worst potential news regarding higher costs.
- As long as energy prices can remain under control, there is a chance global inflation could start to show erosion over the mid-term.
- This notion may lead financial institutions to lean towards selling positions if they believe the USD/SGD has been overbought in the short-term.
- As a cautionary note, day traders may be able to test technical levels in the short-term, but need to prepare for U.S economic data which will be important on Friday via the inflation report.
Singapore Dollar Short Term Outlook:
Current Resistance: 1.35625
Current Support: 1.35540
High Target: 1.35720
Low Target: 1.35270
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