- In my daily analysis of the US dollar, one of the pairs that I am watching is the USD/SGD pair, as the pair finds itself at a major crossroads.
- The 1.3750 level is an area that’s been important multiple times in the past, as well as 50 pips on each side.
- This is a major “resistance zone”, and the fact that the US dollar is pressing up against that of course is something that will capture quite a bit of attention, as the US dollar has been very strong for some time.
Technical Analysis
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A couple of weeks ago, we had the so-called “golden cross”, when the 50 Day EMA crosses above the 200 Day EMA, kicking off a very bullish longer-term signal. However, we need to overcome the 1.38 level in order to feel comfortable with the uptrend continuing. This probably has everything to do with interest rates in the United States and the fact that they continue to climb. It’s worth noting that the 10 year yield has been on an absolute tear to the upside, and as of late it doesn’t look like there’s a whole lot to change that.
On the other side, you do have worries about Asia slowing, and although Singapore itself is a very strong economy, the reality is that as China goes, so goes everybody else sooner or later in that region. So, having said that in recognizing that interest rates have absolutely collapsed in China, it suggests that traders believe that the Asian economies are going to continue to be on the back foot, most notably China. This will have a knock on effect in Singapore, Singapore is a major banking hub for Asia, it’s hard to imagine that Singapore will come out of this unscathed.
With that being said, the 50 Day EMA is near the 1.35 level, so anything below there would obviously be very US dollar negative, but I suspect you would see that in reaction to the US dollar selling off against multiple currencies, not just the Singapore dollar itself. On a break higher, we could be looking at a move to the 1.44 level before it is all said and done.
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