The USD/SGD is trading within the lower elements of its near-term range after experiencing a reversal higher towards the end of last week.
- Following yesterday’s U.S and U.K holidays which created a lack of volume in the broad Forex markets the USD/SGD is trading near the 1.34830 ratio early this morning.
- After flat-lining most of Monday the USD/SGD opened with selling momentum today and touched a depth of nearly 1.34680 before seeing some buying come into the currency pair. The USD/SGD is now traversing values it touched last Wednesday.
While behavioral sentiment in the broad Forex market is showing signs of leaning towards a weaker USD centric approach, the USD/SGD did thrust upwards last Thursday as the Purchasing Managers Index data from the U.S came in stronger than expected. However, after breaking above the 1.35000 level and touching a high near 1.35125, the USD/SGD although it did move slightly higher and challenged the 1.35270 vicinity on Friday then began to edge lower again before going into weekend.
USD/SGD Technical Levels were Not a Coincidence
Before going into the long holiday weekend the USD/SGD was trading right around the 1.35000 ratio. This showed that financial institutions in a sense were comfortable going into a break which was still within the lower elements of its one month trading range. The U.S will release important Gross Domestic Product numbers on Thursday, and until then the USD/SGD may find that its current range continues to produce solid technical opportunities to bet on short-term directions.
Support and resistance levels have done a good job of maintaining a fairly steady price the past week as financial institutions seem to be waiting for another big piece of impetus. While concerns certainly exist regarding inflation remaining sticky, if growth numbers via the GDP can come in below expectations this could fuel selling sentiment and create a test of lower values for the USD/SGD.
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Wagering on the USD/SGD before Key U.S Economic Data
What financial institutions are counting on is a fulfillment of their outlook which confirms the U.S economy is slowing and the belief inflation will start to show more erosion. In the meantime, the USD/SGD will likely move within a rather controlled range today and tomorrow that follows the price action of last week.
- Speculators looking to wager on the currency pair in the hopes of a sudden break below technical support of 1.34650 before Thursday’s U.S data will likely need to use a less ambitious target.
- Traders who believe the USD/SGD remains in overbought territory and want to sell on reversals that move upwards in the near-term cannot be blamed.
- However, if the GDP numbers are stronger than anticipated this Thursday, particularly the GDP Price Index then the USD/SGD could cause a violent reaction and jump higher again.
- The name of the game this week will be the growth (or lack of growth) data from the States.
Singapore Dollar Short Term Outlook:
Current Resistance: 1.34875
Current Support: 1.34790
High Target: 1.34980
Low Target: 1.34690
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