The USD/SGD has broken through support levels with solid bearish momentum again, but experienced traders may suspect a reversal is due. Predicting when a trend upwards will develop could be a painful task if risk management is not used properly. Speculators cannot be faulted for looking at support levels within the current technical junctures and feel the desire to seek reversals higher with limit orders believing some buying of the USD/SGD will develop from time to time.
However, the Singapore Dollar has slashed through support and is testing values not seen since early February and if selling mounts it could set the stage for an important technical battle below. However, before the USD/SGD is able to see if the inflection point of 1.36400 will prove an intriguing speculative trading area – it must get there first. Patience is needed as always, and the real question that should be asked is if the USD/SGD has produced too much exuberance via its bearish trend.
Support levels this morning are dynamic and the 1.36750 should be watched attentively. After hitting this value level yesterday, the USD/SGD has seen a small wave of buying emerge. While speculators may point to the buying and believe this demonstrates a bullish trend can develop, they would be arguing against a selling trend which has been strong since late March.
Singapore banks have let it be known the past couple of days that their profits have been hurt the past two quarters and they admit they believe the Asian business environment will remain challenging the remainder of this year. Investors will actually appreciate this transparent information which shows the Singapore banking sector is operating with no illusions. Banks in Singapore have also said they are prepared with bad debt provisions if companies find it difficult to pay off their loans in the coming months.
The USD/SGD remains a vital barometer of global risk appetite because of its geography and place within the financial landscape. The ability of the Singapore Dollar to remain strong and begin testing values which have not been traded since the early days of coronavirus fears spreading globally, sets the table for intriguing speculative trades.
Yes, the USD/SGD has remained bearish. Traders should question if the forex pair can continue to challenge support levels, but they may want to do this while continuing to pursue the selling trend which has been overwhelming the past five months. Shorting the USD/SGD continues to make sense if traders practice risk management well and guard themselves against occasional reversals higher.
Singapore Dollar Short Term Outlook:
Current Resistance: 1.37050
Current Support: 1.36750
High Target: 1.37150
Low Target: 1.36400
