Speculators who anticipated the consolidated range of the USD/SGD to remain unchallenged yesterday witnessed a surge downwards as support levels proved vulnerable. The USD/SGD found itself challenging the 1.37300 level and then reversed quickly upwards. However, the very quick move higher didn’t really challenge technical resistance levels from the day before.
The 1.374000 juncture seemed to become a focus for the USD/SGD yesterday as this level proved to be a viable support juncture. As of this morning’s trading, the Singapore Dollar has seen some buying of the USD/SGD, but it has not tested key resistance levels, which actually make the forex pair attractive to speculators again who believe risk appetite will remain stable the next two days of trading before going into the weekend.
Resistance near the 1.37900 seems to be the logical choice as a barometer for the USD/SGD. The Singapore Dollar is now battling values it last touched in February. So the question traders should now ask is if the USD/SGD’s bearish momentum can actually begin to challenge pre-pandemic coronavirus economic implications? Risk appetite is certainly showing signs of life in global equities, but is there enough to add additional firepower to ignite more selling of the USD/SGD?
Actually, the answer may not need to come from an increase in the current levels of risk appetite. The answer may be found if sentiment regarding the US Dollar is inspected closely. The US Federal Reserve essentially showed that it has no intention of increasing its interest rate policy yesterday until the US economic situation stabilizes and the nation emerges from its coronavirus quagmire. Quantifying the total bill the US is going to pay for trying to stabilize its economy and booster growth in the coming half year remains guesswork. The US Federal Reserve and Treasury will remain under immense pressure.
If current risk appetite remains steady globally and the US Dollar shows weakness, it is reasonable to believe the USD/SGD will continue to see its technical bearish trend continue. Although support levels produced reversals higher yesterday, support remains vulnerable and resistance levels are continuing to incrementally decrease.
Selling the USD/SGD under present market conditions and taking advantage of the technical perception its bearish trend will produce more downward pressure is the logical choice for speculators. Traders should use their risk management tools wisely; selecting resistance up above as stop loss limit orders makes sense.
Singapore Dollar Short Term Outlook:
Current Resistance: 1.37900
Current Support: 1.375300
High Target: 1.38100
Low Target: 1.37300
