Volatility has emerged within the USD/SGD as risk appetite is being confronted by the notion caution needs to be practiced. The battle which has erupted in the Singapore Dollar was demonstrated yesterday when the USD/SGD climbed higher and broke the 1.36200 levels which essentially tested values not seen since the middle of October. This resistance level may prove very important if it is approached again near term.
The USD/SGD continues to trade within a strong bearish trend, but recent reversals higher have proven strong. While yesterday’s price action did not maintain value above the 1.36200 level, speculators cannot be blamed if they look at technical charts and wonder if a re-test of late September highs are possible. As risk adverse trading took hold of US equity indices yesterday, investors clearly displayed their practiced tradition of seeking safe havens.
However, the Singapore Dollar is a stable currency; the USD/SGD is not a forex pair that produces constant volatility. The Singapore Dollar trades within a comfortable and known range most of the time. This conclusion sets the table for speculators who have seen bullish momentum creep into the USD/SGD based on risk adverse sentiment increasing versus the acknowledgement the Singapore Dollar has also experienced a significant bearish trend since the third week of March.
As of this writing the USD/SGD is near the 1.35900 mark and has shown the ability for some downward price action. Global risk appetite will likely remain fragile the remainder of this week, but it doesn’t mean risk takers will not emerge. Financial institutions may believe any selloffs in the global markets actually make the assets they want to accumulate cheaper in the short term to buy. Meaning if the USD/SGD is overbought because of risk adverse sentiment, sellers may emerge who believe the Singapore Dollar’s bearish trend is not ready to end in the immediate future.
Selling the USD/SGD with limit orders if it tests higher values near the 1.359500 to 1.36000 junctures may prove a risk takers speculative delight. Certainly the forex pair can continue to exhibit bullish momentum higher, but the notion that the USD/SGD will also resume bearish behavior should factor into trading consideration near term based on the notion yesterday’s price action was an over reaction.
Singapore Dollar Short Term Outlook:
Current Resistance: 1.36000
Current Support: 1.35720
High Target: 1.36350
Low Target: 1.35610
