The USD/SGD remains situated in lower depths and in a rather technical range which likely is creating different trading perspectives and strategies among speculators.
- Lows seen early this morning in the USD/SGD saw the currency pair tough the 1.28890 area, but this depth still was not able to muster enough selling to re-challenge lows seen last Wednesday when the 1.28825 mark was flirted with briefly.
- The USD/SGD exchange rate is now around the 1.29100 ratio. And the reversal higher this morning has been a feature of the currency pair’s price action the past week.
Certainly the lower depths of the USD/SGD remain in focus. The 1.29000 level seems to be a key psychological value as it attracts a whirlwind of results as financial institutions seem to lock onto the notion that it may be serving as equilibrium. However, day traders need to understand perceptions can sometimes be wrong and must remember the trend lower in the USD/SGD has been strong. The 1.29000 may remain in sight in the near-term but plenty of opportunities may be elsewhere depending on price targets.
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Equilibrium as a Wagering Ground in the USD/SGD
After the Federal Reserve’s interest rate cut last Wednesday the USD/SGD has seen a wave of reversals occur and the currency pair has not been able to trade lower than its initial selloff seen on that day. Day traders likely are being tempted to look for quick hitting technical reversals which are testing values populated around the current ‘base’ price which seems to be acting like a focus for larger houses around the 1.29000. However, traders should not use this ratio as a place to initiate bets.
The U.S will release GDP numbers on Thursday, and this number will likely prove to be a big impetus in Forex this week including the USD/SGD. If the growth number is weaker than anticipated this may spark some additional selling in the USD/SGD based on the notion the U.S economy is not as strong as some people claim. If however the outcome is stronger, than it may create some buying in the USD/SGD because this may mean the U.S Fed will not be able to be as aggressively dovish as hoped.
Results Baked into the USD/SGD Already
Traders need to remember the larger part of the price trend in the USD/SGD which has been accomplished the past few months is unlikely to produce another move downwards like has happened already. The results of a dovish U.S Federal Reserve have already been baked into the price of the USD/SGD. It is likely that for the USD/SGD to move lower in a sincerely stronger fashion the Fed would have to cut interest rates more than a combined 0.75% rate over the next handful of months.
- For this to happen U.S economic data will need to remain lackluster via jobs, growth and U.S inflation will need to erode further.
- While that might happen, it also may not, meaning the current price ratios of the USD/SGD may remain a known trading ground until another dose of strong clarity is delivered.
- Day traders should not be overly ambitious and look for quick hitting trades which they believe match their technical interpretations.
Singapore Dollar Short Term Outlook:
Current Resistance: 1.29150
Current Support: 1.29080
High Target: 1.29340
Low Target: 1.28890
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