The USD/SGD pair took a step back on Monday, trading at around 1.3171 as the U.S. Dollar softened following the unwinding of the “Trump trade”—a term often used to describe bets on a stronger Dollar due to anticipated inflationary policies linked to former President Trump’s fiscal policies. As the USD loses momentum, analysts at OCBC, Frances Cheung and Christopher Wong, provide insights into key levels and potential movement.
Why the USD Is Losing Ground Against SGD
With less certainty surrounding Trump-related economic expectations, the Dollar has lost some of the bullish drive that carried it in recent weeks. Analysts note a decline in bullish momentum on USD/SGD’s daily chart, with the Relative Strength Index (RSI) dipping from previously overbought conditions. This cooling of momentum has opened doors for the Singapore Dollar (SGD) to gain strength, causing USD/SGD to slip from its recent highs.
The Singapore dollar also received a boost as the Singapore Nominal Effective Exchange Rate (S$NEER), a measure of the SGD’s value relative to a basket of other currencies, rose to 1.62% above its model-implied midpoint. This indicates continued demand for SGD, strengthening the currency further against the USD.
Key Support and Resistance Levels
For traders eyeing the USD/SGD pair, OCBC analysts highlight key levels that could influence upcoming price action:
- Support: The first line of support stands at 1.31, which coincides with the 38.2% Fibonacci retracement level. If USD/SGD falls below this point, a deeper drop to the 50-day moving average (DMA) at 1.3040 could be on the horizon.
- Resistance: Should USD regain strength, initial resistance can be found at 1.3190, the 50% Fibonacci retracement level. A break above this could lead the pair to 1.3290, aligning with the 61.8% Fibonacci retracement from June’s high to October’s low.
Also read : Singapore Dollar Strengthens By 0.017%- A New Era For ASEAN Amid US Dollar Decline
Technical Indicators Signal Potential Consolidation
Technical analysis suggests that USD/SGD could consolidate within this range in the near term, as the bullish momentum observed recently has diminished. The RSI easing from overbought levels points to a market that may be stabilizing or potentially preparing for another test of the lower support levels, particularly if SGD demand remains steady.
