USD/SGD faces a major support at 1.3160 – UOB
|Quek Ser Leang at UOB Group’s Global Economics & Markets Research, gives his views on USD/SGD.
Key Quotes
“In the FX Technical section of our Quarterly Global Outlook published one month ago on 19 Mar 2021 (when USD/SGD was trading at 1.3410), we noted the breach of the declining trend-line resistance, and we held the view that USD/SGD ‘is likely to strengthen further’ in the second quarter of the year. We highlighted that ‘a break of the 55-week exponential moving average at 1.3560 would not be surprising’. USD/SGD subsequently traded sideways but did not break the moving average. Yesterday (19 Apr), USD breached the strong support at 1.3330 and dropped quickly to 1.3300 before extending its decline today (low of 1.3262 at the time of writing).”
“With the 55-week exponential moving average still intact, coupled with the ease by which USD/SGD took out 1.3330 and 1.3300 indicates that our view from last month for USD/SGD to “strengthen further” in the second quarter is incorrect. On the daily chart, the risk has shifted to downside but at this stage, it is premature to expect USD/SGD to break the major support near 1.3160 (low of 1.3157 in Jan and 1.3164 in Feb). Ahead of 1.3160, there is another strong shorter-term support at 1.3200.”
“On the weekly chart, while MACD is weakening, it is still positive. The 55-week exponential moving average currently sits very close to the March’s peak near 1.3530. Within these few months, this level is critical as only a breach of this resistance would indicate that the downside risk has dissipated. On a shorter-term note, the top of the daily Ichimoku cloud near 1.3360 is already quite a formidable resistance level.”
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