The USD/SGD is around the 1.28725 ratio as of this writing in the last full day of trading before the advent of the Christmas holiday season.
After touching the 1.29300 vicinity on late Friday, yesterday’s trading in the USD/SGD showed the ability of the currency pair to produce a barometer for broad market Forex sentiment. The USD had shown strength in the middle of last week and into last Friday, this perhaps as caution seeped into financial institutions which were concerned about a lack of risk appetite in U.S equity indices combined possibly with notions of an oversold USD.
However, after a weekend in which financial institutions could take a deep breath and acknowledge the holiday season trading period is quickly approaching, the broad Forex market has once again demonstrated weaker USD centric price action. And the USD/SGD helped pave the way in early market action yesterday, and once again today. The USD/SGD as of this morning is near the 1.28725 ratio, a value realm not sustained since the fourth week of September this year.
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Lower Values and Sentiment Before the Holidays
Price action yesterday saw sustained selling and the 1.29000 level prove vulnerable. Since penetrating the 1.29000 mark, the USD/SGD has not looked backwards and increased selling early today as financial institutions position themselves ahead of the Christmas holiday is intriguing. The strong selling power is an indication that outlooks for the USD in Singapore may be weaker.
Day traders who want to pursue the USD/SGD need to understand that Singaporean banks close early tomorrow for Christmas eve and are not open on Christmas. This means volumes today and early tomorrow may offer some opportunities to trade the USD/SGD in almost normal conditions, but as the hours draw closer for the holiday, volumes will become thin and trading should be expected to turn choppy.
Speculative Trading the Next Half Day
If a trader insists on pursuing the USD/SGD the remainder of today and into tomorrow morning, strict risk taking tactics should be used. Getting caught with an open position going into the holiday may be uncomfortable, and trading volumes on Friday when Forex essentially reopens for the USD/SGD will probably be quite thin which could lead to some awkward price fills.
- The ability of the USD/SGD to mount downwards pressure yesterday and today show financial institutions do believe the Singapore Dollar will grow in strength potentially over the mid-term
- However, it should also be pointed out that the lower values in the USD/SGD from May until early October of this year were technically lower realms historically via long-term charts for the currency pair.
- Further downside impetus will likely be needed to create significant momentum downwards.
- Meaning traders looking for downside should not get overly ambitious, but also with the holidays about to arrive caution will be needed to avoid sudden surprises.
Singapore Dollar Short Term Outlook:
Current Resistance: 1.28785
Current Support: 1.28710
High Target: 1.28860
Low Target: 1.28660
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