USD/SGD has been trading higher with a resurgence in USD strength and the continued weakness of SGD due to economic woes within Singapore shores. Price has hit above 1.25 recently, though a sell-off was seen quickly after the recent highs, as European woes sparked by Cyprus levy pushed investors across the world seeking triple A rated assets, of which Singapore is one of the few remaining ones. Also, commercials were seen buying SGD cheaply above 1.25 as many exporters choose to hedge foreign FX exposures while SGD was at its weakest in more than 6 months. Both factors allowed USD/SGD to collapse significantly, losing more than 100 pips in a span of 1.5 week, almost erasing the hard fought gains made in Mar entirely.
Daily Chart
Price has since broken below the rising Channel, forming an Evening Star candlestick pattern just below Channel Bottom. Currently 1.24 support is still holding, making a retest of Channel Bottom possible especially with Stochastic reading hinting to bottom out. 1.245 may provide resistance in the aforementioned manner and a failure to breach back into the Channel may open up 1.235 floor vulnerable.
Hourly Chart
From the hourly chart, price has broken from the descending trendline last Friday. This morning’s gap higher shows bulls continuing the uptrend signal, though price is facing resistance just above 1.242. The failure to push above the resistance will weigh on bears favor with a re-test of the descending trendline possible. Stochastic readings, though not in the Overbought region, is still threatening to form a peak. Furthermore, readings are close to the 2 recent peaks despite price being significantly higher. This divergence between price and reading is bearish and enhance the likelihood of the topside resistance holding on.
Fundamentally, SGD is facing interesting times. Despite disappointment in recent Export and Manufacturing data, long-term outlook of Singapore economy by analysts at large remains robust. This view is also echoed by official Government estimates and private sector sentiment polls. With all these in mind, it is highly unlikely that MAS will ease SGD in its upcoming April Monetary Policy announcement (date still unconfirmed), though market hasn’t been expecting MAS to be doing so for a very long time. Of more interest, would be MAS’s macroeconomic review which would also be released in April. Traders will do well to read the review and see the direction of Singapore’s economy in 2013 from MAS’s perspective.
More Links:
GBP/USD – Cuddles up to 1.52
AUD/USD – Settles Back at 1.04
EUR/USD – Rests Comfortably on Support at 1.28
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This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.
View the original article: http://forexblog.oanda.com/20130401/usdsgd-technicals-short-term-resistance-reached/
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