Singapore Dollar: Consolidation bias holds within tight band against US Dollar – UOB

United Overseas Bank’s Quek Ser Leang and Lee Sue Ann note USD/SGD reversed its New York-session plunge after softer United States (US) Consumer Price Index (CPI), closing near 1.2910. UOB's Singapore Dollar (SGD) Nominal Effective Exchange Rate (NEER) model suggests the Singapore Dollar will stay 1.50–2.00% above midpoint, implying a 1.2874–1.2939 USD/SGD range intraday. Short-term, they expect consolidation, while the broader 1-3 weeks view sees limited downside within 1.2860–1.2955.

Dollar-Singapore seen consolidating

"24-HOUR VIEW: USD rose to a high of 1.2950 two days ago. When it was at 1.2945 yesterday, we highlighted that it “could edge above 1.2955 and test 1.2965.” We were incorrect, as USD traded in a quiet manner until the NY session when it plunged to a low of 1.2875. The decline was, however, short-lived, as USD snapped back up to close at 1.2913 (-0.29%). Downward momentum has increased, but not significantly, and instead of continuing to decline, USD is more likely to consolidate today, expected to be between 1.2885 and 1.2930."

"1-3 WEEKS VIEW: The following are excerpts from our update yesterday (14 Jul, spot at 1.2945): “The tentative build-up in short-term upward momentum suggests USD is likely to edge higher from here. However, the likelihood of a break above 1.2990 is not high for now. To sustain the momentum build-up, USD must hold above 1.2900 (‘strong support’ level).” Our view was invalidated quickly, as USD broke below 1.2900 and plunged to a low of 1.2875. While the price action suggests there is scope for USD to weaken, given that there is no clear increase in downward momentum, any decline could be contained within a 1.2860/1.2955 range. To put it another way, based on the prevailing momentum, USD is unlikely to break clearly below 1.2860."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)