- In my daily analysis of the USD/SGD pair, I noticed that we have broken down below the 1.3450 level, which of course is a large significant support level, which we have seen a lot of buyers at previously.
- By breaking down we have, it does suggest that perhaps we could be running into some trouble, and that does make a certain amount of sense considering that the Consumer Price Index numbers came out lower than anticipated.
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Technical Analysis
The technical analysis in the USD/SGD pair obviously shows quite a bit of negativity, but it’s worth noting that the market did bounce ever so slightly after the breakdown, so it’ll be interesting to see whether or not we can recapture the 1.3450 level. If we can break above that level, then it’s likely that the US dollar will go looking to the 200-Day EMA, which is just below the crucial 1.35 level. If we can break above that level, then it opens up the possibility of a move to the 1.3550 level after that.
If we were to break down from here, the 1.34 level is a large, round, psychologically significant figure, and it has offered a little bit of support so far. Breaking down below that level opens up the possibility of a move down to the 1.3350 level. Keep in mind that this is a pair that typically moves rather slowly, so with that being the case I think you’ve got a situation where we just simply go back and forth and try to sort out what is coming next. Keep in mind that a lot of range bound traders love this pair, and the interest rate differential is not massive at this point, and it’s probably worth noting that traders are now betting on the Federal Reserve cutting rates going forward.
In other words, this is a very range bound market overall, but if we do continue to break down in this pair, it’s probably a result of the US dollar losing strength against multiple other currencies around the world. Thursday was a shock, but keep in mind that the PPI numbers come out on Friday, and quite frankly we have seen that completely turn around the attitude of Wall Street after the CPI numbers several months in a row.
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