- The US dollar did initially try to recover its losses against the Singapore dollar during the early hours on Monday but found the 1.3450 level to be a little bit too much and it has since plummeted.
- That being said, I don't necessarily think this is the beginning of some type of massive trend change.
I think you've got a situation here where traders have gotten a little bit ahead of themselves and they might be looking to make some profit. When you look at the charts, it's easy to see that we are hovering just below the overbought condition in the relative strength index. So, a little bit of a pullback again makes a certain amount of sense.
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The 200 day EMA currently sitting around the 1.33 level makes a juicy target for short sellers, and it would also make an area where I think a lot of people might be interested in trying to pick up the trend again. The US dollar continues to enjoy higher interest rates than most economies around the world.
Therefore, you've seen a little bit of a rush into it. Monday has been more or less I believe about profit taking in not only this USD/SGD currency pair, but most currency pairs. And you've seen even some of the most beaten up currencies make gains against the U S dollar during the session as a result. Remember the Singapore dollar is considered to be somewhat of a safety currency. So, it does have that working for it. I think it will continue to do so. This pair is typically very choppy and more of a grind higher, so think the US dollar against the Swiss Franc. It's a very similar type of pair.
So, with that being said, I do think that you will eventually get an opportunity to buy the dollar. But right now, you may have to take a day or two and wait to see if we can bottom and then bounce again for a nice entry.
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